An old TV documentary trick comes to mind when interviewing David Burren, managing director and head of investment at wealth advisory Warwick Butchart Associates (WBA): focusing on a fuzzy, sepia-tinted image of daily life in olden times, the picture gradually fades to a pin-sharp picture of modernity.
WBA seems midway between the two shots, caught between the fadeout from past times and the arrival of a more technocratic, efficient but somehow colder present. Burren is ready to face the future – aged 60, he became a chartered wealth manager in June – but is reluctant to future-proof the business at the cost of giving up some of the things he believes make his job worthwhile.
‘We have always offered people the option of paying fees,’ he says. ‘And if they have opted not to, we are entirely clear about how we are being paid and where that money comes from.
‘In the future [after the retail distribution review (RDR)], we will have to be more restrictive and, yes, we will not be able to serve everyone we did before. We need to consider who we can act for under the RDR, and we are getting hard-nosed about that number.
‘We are evaluating what we have got and where. We need to be proactive in making sure those clients we want to act for understand what our proposition is and the costs involved. There is an ongoing effort [to rationalise the business].’
The tension would be not be worth remarking on in a number of advisory businesses that find themselves unable to keep up with the inexorable pace of regulatory change, or are simply not interested in being part of an industry that in future will require them to be run on a professionalised basis.
But WBA is more complicated than that. A regional advisory firm that for more than 20 years has carved a reputation for its commitment to investment, equal – and in some cases, exceeding – that of its discretionary peers, it still operates out of a former terraced home decorated in flock wallpaper.
Managing more than £100 million in assets on behalf of about 1,000 clients (a number Burren plans to cut down to better suit the brave new world of 2013), the company pulls in approximately £1 million in annual revenue, ‘significantly more than half of which’ is recurring.
The company has 10 employees, five of whom are client-facing with the support of a paraplanner, while four of the team are investment specialists. Apart from minority non-voting stakes held by immediate family members, equity in the business is split 50/50 with chair and lead planner Len Warwick CBE, a former president of the Life Insurance Association and director of the Securities and Investment Board.
In addition to private clients and a significant overhang of hereditary clients, the business also has significant interest in institutional pension advisory and trust work. While the lack of external shareholders has allowed the two to develop the business as they see fit, Burren admits its structure may now be beginning to restrain it from its full growth potential.
The company has never sought discretionary permissions, for instance, partially for capital adequacy reasons but largely because Burren says the nature of an advisory relationship actively requires staff to meet clients and keep them informed.
For similar reasons, the company does not run any models, but builds individual portfolios from the ground up. This is as the directors want it but does not supply much of a scalable platform to lever off the depth of experience in-house.
Burren insists he can’t foresee a time where he would want to retire but it would also be entirely reasonable for two directors at a late stage of their careers to have thoughts about the embedded value of their company.
‘A lot of wealth managers will rarely or never actually meet their end clients [but] we would like to grow. We would like more clients,’ he says.
‘Most of our growth has come from recommendations from people who know what we do. We have not pushed [our services] hard to find more clients, which is a pity in a way. We have expanded the business but it has really been through taking on the right people.
‘A lot of advisers are running away from investment business and when I look at the investment and asset allocation models [of discretionary managers], they are using all the same quantitative and qualitative information sources we do. I don’t really accept there is any fundamental difference in what we do.’
The company is not yet quite ready to accept a packaged future, however, or at least has not yet worked through its reservations about unitising its services to exponentially expand its reach.
‘When I look at what is on offer out there it does sometimes seem as if they are designed to make life easier [for managers]. Many people seem to be trying to produce simple solutions for complex issues.
‘We could easily build model portfolios with representative weightings for a range of different [risk] sectors but at any one time we might have different views on the funds being selected. There is a benefit to the client of receiving a bespoke portfolio. There will always be increasing pressures to rationalise our funds.
‘I was looking at [Standard Life’s] Myfolio allocation recently out of interest, and for an elderly client they were recommending a 5% allocation to Japan. We can talk about the economic prospects for Japan and we will all have a view. They will obviously say it is part of the asset allocation, and that they put a lot of work into getting it right. But would I want to say that decision would be right, across the board? I don’t know.
‘Model portfolios may be right for us and may be the way the business has to be. If we were running £200 million, or running £500 million, would we have to change our process? Would we have to change the way we run portfolios? Probably.’
None of which is to say Burren is pining for some long prelapsarian period of innocence. ‘When I came into this business I just assumed most people were working to a fairly high standard. It turned out that a lot of people were just picking funds from the data at the back of the FT and Money Management,’ he says,
Born in 1952 in Tunbridge Wells to a groundskeeper father and housewife mother, Burren won a scholarship to local grammar the Skinner’s School.
He acknowledges that the school offered him a good start.
He credits his career partially to an unusual combination of interests in both maths and people, but mostly to an innate curiosity and a desire to take things apart to see how they work.
‘My dad was never big on DIY so there were never boxes of screws or whatever hanging around when we grew up. If we wanted to make something or take something apart we had to improvise and work around it.
‘I have always had some ability to take practical problems, break them down and understand them.’
Leaving school in his teens he joined life assurance business Reliance & Mutual, and by the age of 21 was running a department.
He says he gained a reputation as a troubleshooting manager, going through several companies and taking on a series of roles before moving to London in the mid-1980s to work for an institutional investment consultancy, specialising in marketing and product development.
He stayed in the City until 1994 when, looking for a change and something a little closer to his Gloucester home, he joined WBA as a consultant. Within five years, he had bought out a 50% equity stake in the company and become a director.
‘Len had been introduced to me as an IFA mover and shaker but not an investment guy. He was recommended to me as someone knowledgeable and trustworthy, which is important in an adviser but essential in a business partner.’