RUNNINGSOLONEAL HALL IS OFF TO A FLYING START AT ATHERTON YORK

GO ROBO: IFAS’ TOP TECH TIPS

JASON BUTLER: WHY I’VE LEFT ADVICE

PLANNER PICS: IFP EVENT IN PHOTOS

TORIES, TAX AND TROTS!

ALL THE NEWS FROM THE CONSERVATIVE CONFERENCE

12 October 2015IIssue N° 474

For professional financial planners

34 STAR PROFILE

New Model Adviser® I 12 October 2015 I citywire.co.uk/adviser

Neal Hall’s traditional values are winning local plaudits, propelling the fledgling Atherton York onwards and upwards

STAR PROFILE 35

citywire.co.uk/adviser I 12 October 2015 I New Model Adviser®

36 STAR PROFILE

New Model Adviser® I 12 October 2015 I citywire.co.uk/adviser

Atherton York uses in-house, bespoke portfolios and 90% of its investments are passive.

‘In previous roles, I have used a blend of passive and active,’ says Hall. ‘But a raft of active fund closures, which caused many issues for regular premiums and top-ups, and poor performance led to the conclusion that passive is the way forward.’

The firm researches asset allocations using eValue and uses the Vanguard LifeStrategy funds at the core of portfolios, plus other Vanguard and BlackRock funds as building blocks for more bespoke needs.

‘I like Vanguard’s simple, straightforward approach; its performance in hitting the indices we want to track; low costs; and daily rebalancing,’ says Hall. ‘Plus the LifeStrategy funds are very diverse with between 8,000 and 15,000 holdings.’

Hall occasionally uses active funds as satellites if a client has a particular need or conviction that a passive fund cannot meet. ‘However, I often find that when you challenge the client, you find [their ideas don’t stand up to scrutiny] and a simpler approach is best,’ he says.

Hall has considered discretionary fund managers but says: ‘I don’t see the cost and value trading off. I understand that some clients would like that highly bespoke approach, but it is not right for my clients at this time.’

He has also looked at so-called smart beta approaches but was not impressed. He agrees with the comments made by previous New Model Adviser® cover star Kris Heck of London-based Tanager Wealth (issue 471, Index Investing, p. 58) that these products are ‘neither smart nor beta’.

‘That is because you are making decisions through those biases and effectively become an

active fund manager,’ says Hall. ‘Just as active managers can get it wrong, the market can beat you if you make these strategic decisions.’

The Atherton York Balanced Portfolio outperformed the AFI Balanced benchmark in each of the last three calendar years.

Hall says: ‘I attribute this to having heavily diversified portfolios and keeping the costs of investment low. The regular re-balancing of funds would have avoided portfolio drift, which would also have contributed.’

Performance*

POOR ACTIVE PERFORMANCE AND FUND CLOSURES LEAD TO PENCHANT FOR PASSIVES

Tota

l ret

urn

(%)

20132012 2014

AFI Balanced

Atherton York Balanced

0%

5%

10%

15%

ACTIVE FUNDS

10%PASSIVE FUNDS

90%

TIM COOPER

Neal Hall, principal of Atherton York, is a new old-fashioned type of guy. After setting up his firm from scratch just two years ago, having worked for a previous New Model Adviser®

cover star firm, the young adviser has made a success from basing his modern model firm on traditional values.

Hall set up the business in 2013 and his only employee is his wife Maria, who works part-time as operations and marketing director and who has just had their second baby. The firm, though London-based, also makes a show of Hall’s northern routes through its name, taken from Atherton, the maiden name of his grandmother, who was ‘exceptional with money’, and York, the city his family is from.

A recent accolade was scoring a coveted five out of five on adviser rating site VouchedFor, ranking top out of over 90 other advisers in his area of Enfield, north London. But Atherton York is a small firm, without the national scale or ambitions of his previous employer, fellow London advice firm Lift-Financial.

‘I don’t claim to be brilliant,’ says Hall. ‘I just want to

have an honest relationship with clients. I deliberately use phrases like “old fashioned” in my brochure and website. Getting to the point where a client really trusts you is satisfying, especially because trust has been a big issue in our profession.’

The trust issue is partly why he has made a play of the firm’s chartered status in its branding.

‘The aim was to create a high-end, chartered, new model business. Corporate chartered status is a positive differentiator as it demonstrates knowledge and skills and that we adhere to the highest standards. We talk about that at the first meeting, and it’s on all our stationery and website.

‘I also make a commitment that any time the Chartered Insurance Institute launches new qualifications, such as the recent one on pensions, I will attain them straight away.’

Driving it all was the entrepreneurial urge that often defines the leaders of new model businesses.

‘I am lucky to have worked with some top people but I had become frustrated as an employee and looking back, everything in my career prepared me for this,’ says Hall.

Neal Hall CURRICULUM VITAE

CAREER2013-present Atherton York, director2009-2013 Lift-Financial, chartered financial planner2006-2009 Charles Reynolds

& Associates, IFA2002-2005 Santander / Abbey National,

branch manager1996-2002 Abbey National, financial adviser

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS Chartered Financial Planner Fellow of the Personal Finance Society

Just as active eveivetivctiactacs aas aast ast austusJumarket can beat at eat eabeaben bn ancancat cet ketkearkarkmamamddeciecisiosions.ns.’.s.’ns.onsoniosiocisicisecdecdedortfolioooioolioolfortfoortorobenchmarkrkrkarkmamahmchmchnchencenbebebr years.s.rs.arsareayeyer yrving g g ngingvinvi

ND ND PASSIVESSSSESESESVESVEVEVEIVIVSIVSIVPASSI

201441401202

SSIVE FUNDSSSDSDSNDSUNDUNDUNFUFUE FUVE FVE VEIVESIVSIVSIVSSISSSSSSS SDSNDFUNE F

eurial urge that oftenl businesses. h some top peoplen employee andareer prepared me for

Chartered Financial Plannerneanal ncnFiedretertearthahaChCC rernennanPlaPll PialciancannaFind FedereFellow of the Personal Finance Societyetyoccenanl FonPerhe f thofw lowelloFelFeF ytyietcieociSo Soe SncencancnaFinFinal nalonasonrsoersPe Pee Pthethof w oowllo

*Data is net of fund manager and platform charges. Dividends reinvested

STAR PROFILE 37

citywire.co.uk/adviser I 12 October 2015 I New Model Adviser®

UP AND RUNNING: Starting a business six months after the retail distribution review came into force was perfect timing, says Hall, as he had harboured concerns that the reforms could effectively destroy the profession

2013

2014

2015*

FUNDS UNDER ADVICE (£M)

PERCENTAGE OF RECURRING INCOME

TOTAL INCOME (£000)

2013

2014

2015*

TOTAL NUMBER OF EMPLOYEES

1

1

2

2013

2014

2015*

TOTAL NUMBER OF CLIENTS

32

68

105

2013

2014

2015*

TOTAL NUMBER OF ACTIVE CLIENTS

32

68

105

TOTAL COSTS (£000)

ATHERTON YORK

I just want to have an honest relationship with clients. I deliberately use phrases like ‘old fashioned’ in my brochure and website

Neal Hall Atherton York

Starting a business six months after the retail distribution review (RDR) came into force was also perfect timing, he says, as, interestingly, he had harboured concerns that the reforms could effectively destroy the profession.

‘That meant I could see that the sector wasn’t going to collapse, which gave me additional confidence to go it alone,’ says Hall. ‘I had already worked in an RDR-friendly model at Lift, so I had a good idea of how it would work.’

Hall has also been working toward the Investment Management Certificate (IMC) but jokes that his study was ‘rudely interrupted’ by starting a family and this business.

He hopes to find time to complete the IMC because ‘investments are core to our business and in the new pension freedoms era, an additional investment qualification is desirable.’

But finding time for qualifications while running a business, advising and coping with family demands is one of those fundamental challenges facing small IFA firms – no more so than since the RDR.

Hall concedes that running a small business has brought added frustrations; he does all his own administration and paraplanning, which takes five to 10 hours a week. Growth would seem to be one solution. But, despite the difficulties, Hall wants to stay small, and says he does not want to compete with the likes of Lift-Financial, which has offices around the country.

Atherton York started out with just 32 clients, but Hall has increased that to more than 100 over the last two years.

The biggest source of new clients is accountancy firm Mostons, located in the same office building.

‘Sharing offices with a well-established accountancy firm has been a huge benefit for us,’ says Hall. ‘The proximity makes a big difference. There are also reciprocal benefits as all our tax work goes to Mostons and we are helping with its auto-enrolment proposition.

‘Other sources of new clients have been client referrals; lead generators Unbiased and VouchedFor; a solicitor connection; and local marketing initiatives such as joining the local chamber of commerce. We are very pleased with that spread of sources. “Keep it local” is a key phrase for us because clients like dealing with a local firm.’

In the next 12 months, Hall plans to capitalise on this feeling with a local advertising and marketing push.

Behind every great man...

Hall recognises the huge contribution his wife Maria has made to fast-tracking growth in the company. However, she is really only on loan as she is on maternity leave from her role as director of marketing for a City law firm. He plans to make best use of her skills before her leave ends in April. After that he will lose a valuable resource that would be expensive to replace.

‘Because Maria is in professional services, she gets it,’ he says. ‘We would not have been able to afford a consultant of her level yet, so she has helped a great deal. She knows all about market segmentation, and “understanding your clients”. She is also good with client communications, cutting through the jargon and

*projected figures

dphd

toitfw

Mwb

‘ipq

bofi

bahBsL

Htw

57 31 7 60

96 32 15 65

142 38 23 70

38 STAR PROFILE

New Model Adviser® I 12 October 2015 I citywire.co.uk/adviser

making it clearer. It has also been useful having someone from outside to discuss ideas with.’

After April, he plans to take on another staff member, either a well-qualified paraplanner or a junior administrator, to free up his time for business development. Hall also likes the idea of finding a trainee or graduate adviser. ‘We have reached a stage, having got some money in the bank, where we can grow the business and dilute some of the fixed overheads,’ he says.

Client experience

Atherton York has three levels of service: ‘transactional’, ‘advisory’ and ‘advisory-plus’. Most clients are in advisory and receive annual meetings; those in advisory-plus are offered two or more a year.

Clients have the choice of fixed, hourly or percentage-based fees. Hall calculates fixed fees against the hourly rate of £95 per hour.

‘Most clients prefer fixed fees, as they like to know the cost at the outset and to have a cap.’

If ongoing clients choose a percentage, it is 0.5% for the vast majority. However, Hall says an increasing proportion prefer to pay a retainer fee or an hourly rate.

‘Maybe clients are more switched on to fees these days and £100 a month as a retainer is easily understandable.’

He says £95 an hour looks good

value, especially in London, where some advisers can charge over £300.

Hall chose this fee because it is low enough not to ‘put people off’ but is still enough for him to earn a comfortable income. He points out that it includes paraplanning and administration, which he does himself. ‘I am happy to work on that basis,’ he says. ‘However, it is massively important to know which clients are profitable and which aren’t, so I time-record each job for each client.

‘In setting up we had to be all things to all people, but we are beginning to find a niche in this and surrounding

postcodes; and we are building a specialism in retirement planning.’

Atherton York has achieved a 70% recurring income already and Hall expects that to keep climbing.

The firm has very few transactional or pay-as-you-go clients. ‘Everyone who

has come on board, with two exceptions, pays an ongoing

fee,’ he says. ‘Some people haven’t been as receptive,

and at the next review we will discuss whether financial planning and our services are right for them. If they don’t use the services, I will not take a fee

from them.’

Playing the long game

The firm’s income has also climbed quickly from £57,000 in the first full year to £140,000. ‘That income is modest for a London firm though,’ says Hall. ‘We can add another £50,000 to that next year, and get near to £200,000 income with £50,000 costs. At

that point it will become important to find someone to support me while I do more farming and harvesting.’

He says his main targets apart from recruitment are to work more intelligently, become more automated, and improve client communications.

‘I would like to increase our quarterly newsletters to every other month with a more automated process and a campaign monitor system to give us more information about each,’ he says.

‘The client review and the on-boarding process needs to become smarter and less reliant on me. In the next three to six months, we need to be sharper on cashflow modelling. We don’t use it much yet – just via a spreadsheet. I will be looking at alternatives.’

Hall has no longer term plans beyond these, however. ‘This is evolving and I am keen to avoid the mistakes that I see some businesses making – growing too quickly and losing control and sight of their core values,’ he says. ‘I am playing a long game in that sense.’

‘I’m 41 so I have at least 20 years to go. It would be great if this business lasts beyond me, but that is a long way away. The accountancy business [next door] is a family business – that is a great model, which I would like to follow.’

Family circle

Work-life balance is tough with young kids at home. Hall has had to work most weekends and many evenings since starting up. ‘But it has been rewarding,’ he says. ‘Fortunately, you get some notice before having a baby, so I did 85% of my client reviews in the first half of this year before our second child was born.

‘I am pleased with the way things have gone. When we set this up, we wrote a three-year business plan and exceeded our two-year targets by 20%, so we are ahead of schedule.’

Hall does have time to spend keeping fit, however, and he runs at least two half-marathons a year.

‘One of my tips is to look after yourself because in a small business you are the business,’ says Hall. ‘I’m at the gym two or three times a week, and I run from home to the office and back. However, I can’t do too much as family is important and I am needed at home.’

Reflecting on how grandmother Atherton would have felt about the success of the business so far, he says: ‘She would have been really pleased and would have encouraged the innovation. But she was very modest, as I hope I am, and would also say there has been no “success” yet.’

5 TOP TIPS

I am keen to avoid the mistakes that I see some businesses making – growing too quickly and losing control and sight of their core values

Neal Hall Atherton York

overheads,’ he says.

Client experience

Atherton York has three levels of service:‘transactional’, ‘advisory’ and ‘advisory-plus’.Most clients are in advisory and receive annual ameetings; those in advisory-plus are offered ttwo or more a year.

Clients have the choice of fixed, hourlyor percentage-based fees. Hall calculatesfixed fees against the hourly rate of £95 per hour.

‘Most clients prefer fixed fees, as they like to know the cost at the outset and to have a cap.’

If ongoing clients choose a percentage, it is 0.5% for the vastmajority. However, Hall says anincreasing proportion prefer to paya retainer fee or an hourly rate.

‘Maybe clients are more switched on to fees these days and £100 a month as a retainer is easily understandable.’

He says £95 an hour looks good

for each client.‘In setting up we had to be all things to all people, but

we are beginning to find a niche in this and surroundingposp tcodes; and we are building a specialism in

retirement planning.’Atherton York has achieved a 70%

recurring income already and Hall expects that to keep climbing.

The firm has very few transactional orpay-as-you-go clients. ‘Everyone who

has come on board, with twoexceptions, pays an ongoing

fee,’ he says. ‘Some people haven’t been as receptive,

and at the next review we will discuss whether financialplanning and ourservices are right forthem. If they don’t use the services,I will not take a fee

from them.’

Playing the long game

The firm’s income has also climbed quickly from £57,000in the first full year to £140,000. ‘That income is modest for a London firm though,’ says Hall. ‘We can add another £50,000 to that nextyear, and get near to £200,000 income with £50,000 costs. At

that point it will become important to find someone to support me while I do morefarming and harvesting.’

He says his main targets apartfrom recruitment are to work moreintelligently, become more automated, and improve client communications.

‘I would like to increase our quarterly newsletters to every other month with a more automated process and acampaign monitor system to give usmore information about each,’ he says.

‘The client review and the on-boarding process needsto become smarter and less reliant on me. In the nextthree to six months, we need to be sharper on cashflowmodelling. We don’t use it much yet – just via a spreadsheet. I will be looking at alternatives.’

Hall has no longer term plans beyond these, however. ‘This is evolving and I am keen to avoid the mistakes that I see some businesses making – growing too quickly and losing control and sight of their core values,’he says. ‘I am playing a long game in that sense.’

‘I’m 41 so I have at least 20 years to go. It would be great if this business lasts beyond me, but that is a long way away. The accountancy business [next door] is afamily business – that is a great model, which I wouldlike to follow.’

Family circle

Work-life balance is tough with young kids at home. Hall has had to work most weekends and many evenings since starting up. ‘But it has been rewarding,’he says. ‘Fortunately, you get some notice before havinga baby, so I did 85% of my client reviews in the first half of this year before our second child was born.

‘I am pleased with the way things have gone. Whenwe set this up, we wrote a three-year business plan and exceeded our two-year targets by 20%, so we are ahead of schedule.’

Hall does have time to spend keeping fit, however,and he runs at least two half-marathons a year.

‘One of my tips is to look after yourself because in asmall business you are the business,’ says Hall. ‘I’m at the gym two or three times a week, and I run fromhome to the office and back. However, I can’t do toomuch as family is important and I am needed at home.’

Reflecting on how grandmother Atherton would havefelt about the success of the business so far, he says:‘She would have been really pleased and would haveencouraged the innovation. But she was very modest,as I hope I am, and would also say there has been no “success” yet.’

TOP TIPS

control and sight of their core valuesNeal Hall Atherton York

Have a strong vision. Look at your own values and embody them in your business.

Focus on knowledge. Achieve the highest level that you can and always be up to date.

Be your own boss. It is rewarding and not as difficult to do as others would lead you to believe.

Know and live your business plan. Make it robust, update it quarterly and set targets that will stretch you.

Look after yourself. You are your business, keep yourself mentally and physically in good shape.