James Drace-Francis wanted a fresh challenge when he was deciding on his next career move. After taking some time out from the industry following a spell at JP Morgan Private Bank, he admits he had grown somewhat disillusioned with where wealth management was heading.
‘At one point I was beginning to conclude this industry was maybe dying a death,’ he explains. ‘It was not addressing the needs people had and with the increasing costs, I wondered how anyone could make any money in it?’
That was before he decided to join Tcam Asset Management, however: a decision he says has renewed his ambition for wealth management. The Edinburgh-based firm hired the UBS alumni to spearhead its expansion into London, building a branch in the capital. Drace-Francis says he cannot wait to get started.
‘I have always wanted to do this,’ he says. ‘What is exciting is I have the ability to actually change things and deliver a better outcome. I had kissed a lot of frogs when I decided to come back [to the industry] but then I was introduced to Tcam by a close personal friend.’
Following a ‘deep dive’ into Tcam’s investment philosophy and its growth ambitions with chief executive Haig Bathgate, Drace-Francis decided to join the team.
‘When you get to a certain age, all the roles you look at are the same. But this is something completely different,’ says Drace-Francis. ‘Fast forward a few months and I have come out of some big client reviews where I have seen a level of service hundreds of miles beyond what you expect from even the biggest institutions. It is all very exciting.’
Some time on from the honeymoon of handshakes and hellos and now the investment director is putting his plan into action. Though Tcam already has premises in London, via its historical link with Turcan Connell, the law firm which owned the business until 2015, the rest will be up to Drace-Francis.
‘Right now, it is baby steps,’ he explains when asked about his recruitment plan. ‘Big banks have shown if you hire a team of people in one go it does not work.
'With that, you need to pay a lot before you see additional revenue come in. And you need to integrate each person into the team, which takes time. We will be bringing in new people but we are going to blend new hires with people we bring down from Scotland.’
Oliver Murray, an investment manager who has been with Tcam for almost his entire career, is one of the Edinburgh team relocating to London to help Drace-Francis on his mission.
‘He is an experienced guy who understands all aspects of the job. Clients will want someone at the desk who can react to queries and what is happening out in the market. Oliver is very much client-facing and he will be holding down that end while we market our business.’
The latter task, which includes hunting out new clients, falls to Drace-Francis. London is arguably one of the most competitive cities in the world when it comes to wealth management, but he knows what he has to do in order to survive and thrive.
‘One thing we need to do more of is develop an intermediary network,’ he says. ‘We have some strong relationships in place but we need to take time and travel around places like the Channel Islands and the Isle of Man to really build that up.
'These experts will quickly understand our cost effective service and hopefully will be more likely to get involved first.’
This alludes to a point Drace-Francis picks out as a competitive advantage he plans to use when spreading Tcam’s message to potential London clients.
The business has developed its model with costs in mind and prides itself on stripping back unnecessary fees. As well as enabling the team to take on smaller portfolios relatively easily, he hopes this will attract clients who have become disenchanted with incumbent wealth management offerings.
‘I recently met a classic potential client who has worked as an investment banker for some thirty years,’ he explains by way of example.
‘He has money with an incumbent and has, like many people, had decent performance. However the service he has received has been very “salesy” and about pushing products.
‘We are going to be different. This individual in particular has to think about restructuring their pension and has been charged an eye-watering amount of money for advice, whereas we can do that at a very competitive rate.’
Regulation and fee pressures have led to many businesses having to review their margins and how they actually deliver returns for clients. While this is an ongoing process and Tcam is subject to the same pressures, Drace-Francis says the company has already gone some way to future-proof its revenue base.
‘The incumbents have had a very difficult time moving from a sales-driven model to a relationship-driven model. The revenue profile has completely changed,’ he says.
‘The cost structure has changed and some business models are now completely unsustainable.’
As the London presence grows, Drace-Francis says its services are likely to develop alongside the skillsets of its hires and according to the demands of its clients.
‘The difference with London is there are many more international people here. We are in the middle of discussing co-operations that will allow us to do new things in different ways. We will be able to do
offshore booking, Lombard [secured] lending and mortgages.
‘We come from an advisory background so planning is part of every conversation we have. We are able to deliver a service that incorporates tax advice and takes tax implications into account. We can do this with existing partners or a client’s own tax adviser.’
The core offering will remain investment however. The company’s marketing has been eased by some pretty decent performance, with its internal equivalent of a balanced portfolio returning 26.4% over three years versus an ARC Sterling Balanced return of 17.8%, and 53.2% over five years, versus 33.8%.
Tcam will stick to what it does well and with this, Drace-Francis dismisses the notion of robo-advice.
‘The industry is a long way from going down the robo route,’ he says. ‘There has been a huge amount of noise around it but if you look at a robo-adviser it is like a pantomime horse.
‘The front end is marketing and eats money and the back end is all the algorithms and they are only as good as the coding and the raw data. The science is nowhere as good as the experienced human investor or tax planner at this point of time.’
Overall, he is excited about the task that awaits him. Though London is a competitive space, filled to the brim with wealth firms, there is a great opportunity to be grasped and he is looking forward to creating something for Tcam while putting his own stamp on it. There is also the positive for him, and Tcam’s clients, that the business is not pursuing growth in the capital in an aggressive manner.
‘Having annual targets is a dangerous and toxic thing,’ he says when asked about expectations for how many new clients he is expected to sign up.
‘We are flexible and this is a deliberate strategy. Because of our cost structure we can manage smaller client sizes and continue to help them as they grow. We can predict what we can achieve and historically we have beaten these expectations. But, first and foremost, the priority is good service for clients who will then hopefully refer friends and contacts to us.’