Sometimes, great businesses can lead to the creation of other great businesses. Solid training plus a fresh perspective can spark an idea that goes on to challenge the traditional way of doing things.
This is how Jaskarn Pawar came to set up his low-cost, remote advice business Investor Profile. That, and a nagging sense that going to your bank for financial advice wasn’t the answer.
His road to delivering advice differently started with a financial services degree at Sheffield Hallam University, including a placement year at Baigrie Davies where Jaskarn completed his financial planning certificate. From there he took on a paraplanning role at Bloomsbury Wealth, and was introduced to the world of cashflow planning and wealth management.
After two and a half years, Jaskarn was keen to develop his skills but not in London, and wanted to move back home to Northampton. He retraced his steps back to Baigrie Davies and got in touch with the company’s co-founder, Tom Baigrie.
Jaskarn says: “Tom is the one who gave me the opportunity. I am forever grateful to him, as he didn’t have to give me a job.” He laughs: “He probably figured it was cheap labour.” He didn’t know much about LifeSearch, the Baigrie Davies sister firm and giant of the protection advice world – all he knew was they had an office in Milton Keynes. And so he found himself on the phones, advising people on protection policies. “It was massively different to what I’d been doing before, but without that I couldn’t have gone on to the next step.”
The importance of choice
The germ of the idea for Investor Profile came about when Jaskarn was doing his degree. “I’d always known people who wanted financial advice, normal people who didn’t know anything other than going to their bank. For some reason, even in my late teens/early twenties, I knew that was a bad idea. I thought: ‘There needs to be a way for those people to get really good quality advice, rather than just being sold to.’
“Having worked at Bloomsbury I thought this was the kind of advice people wanted, quality financial planning backed by financial principles, with a lot of hand-holding and education. But at Bloomsbury there was a £1m minimum at the time, which is not very practical for normal people.”
Jaskarn says at the time the debate among the Institute of Financial Planning community was about how to make financial planning more accessible. His time at LifeSearch gave him a window into a different way of working, where on a phone call you can do a good fact-find and gain an understanding of a client and who they are within around 20 minutes. “I thought: ‘I get financial planning, and I get telephone-based advice.’ I basically put the two together and set up Investor Profile.”
"I feel quite passionate about there being lots of different options for people. For an industry as old and as evolved as financial services, it is actually reasonably poor at offering choice. There’s not that much variety to the advice process."
Investor Profile delivers low-cost advice via telephone and email, but the model shows ‘low-cost’ doesn’t have to mean poor quality. Jaskarn is both a chartered financial planner and a chartered wealth manager.
He admits most people may prefer face-to-face advice. But setting up as he did in the middle of the financial crisis, he says the remote advice model was about having a point of differentiation, as well as offering clients the choice of a lower cost, more convenient means of accessing advice.
“I set up the business through 2008 and 2009, and if you’re going to set up a business in a pretty bad time then you’ve got to do it differently. I’ve never really seen the point of setting up a business and then doing what everyone else does. To me, that’s a bit boring. For those who choose that route that’s fine and that works for them - there’s a lot to be said for making life easy for yourself. I just chose to do things a different way.
“There’s enough people out there who don’t mind getting advice remotely, and appreciate that it’s at a lower cost as well. I feel quite passionate about there being lots of different options for people. For an industry as old and as evolved as financial services, it is actually reasonably poor at offering choice. There’s not that much variety to the advice process; I’m quite proud of being able to offer that variety.”
How Investor Profile works
There are three strands to the business: advice “surgeries”, recommendation reports, and wealth management.
The surgeries are done over the phone and booked by appointment, and provide 30 minutes of financial advice for £40. The format has now been extended to the workplace, with Jaskarn going into offices and offering surgeries to staff which are funded by the employer. Some use the surgeries as a standalone session, while others view them as ‘testing the water’ before making the leap to full advice.
For the report service, clients can choose from an investment planning report at £250, a retirement planning report for £500 or a comprehensive financial planning report at £750. Wealth management is charged at an initial 1.1 per cent and 0.5 per cent ongoing.
Screen shots from Investor Profile's website
The business benefits from working with other advisers, and those firms referring clients to Investor Profile.
“At the moment, we probably get about 75 per cent of our clients from other advisers. And we refer back the other way as well. Advisers may come across people that don’t require complex financial planning or have smaller portfolios. Or they may have people who’ve been clients previously but because of the work already carried out their circumstances are simpler. Those are the kind of cases that then get passed over to us.
“That works really well, and clients appreciate that the firm passing them on has evolved. That’s just the way the world works. But they also appreciate that there is someone like us who’s going to be there for them. That’s the most important thing – as long as they know they can get advice when they need it, and someone’s going to look after their investments and their finances, then that’s pretty much all they want.”
The evolving advice market
Jaskarn sees access to advice as a critical issue, but argues tackling it is not just about widening accessibility generally, but widening access to quality advice.
The original objectives of the Financial Advice Market Review were to develop a market that delivers affordable and accessible advice – goals that Investor Profile shares. But Jaskarn says it’s unclear whether the FAMR initiative has moved things on in a meaningful way, as the challenge of improving awareness of the benefits of advice has been left unanswered.
“Access to advice is a really big problem for two reasons. One, there’s a proportion of people that don’t necessarily value or want to pay for advice. Two, there’s a proportion of people who don’t understand advice and what it can offer them. Awareness is probably the biggest issue we face. Anyone that understands the value of advice, that’s great, that the kind of client we’re all after. But for those who don’t, that’s a tricky one.”
He sees the growing robo-advice market as an “ideal evolution for DIY investors” that could act as a gateway to advice for prospective clients.
Clearly, the starting point for engaging with clients is that they want to be sitting in front of you. Jaskarn says the pension freedoms reforms have created an environment which compels people to take advice, and he is sympathetic to both clients and fellow advisers who have to work within these confines.
But he says: “The pension freedoms themselves are fantastic because they’ve matured the retirement market. A couple of years ago I heard someone describe people in retirement, and how people in the US in retirement will consider themselves investors, whereas people in the UK in retirement will consider themselves pensioners.
“Nowadays, if you go into drawdown, it’s quite an adult process and you’ve got to think about this stuff. That’s a key evolution, because it makes people realise they are investors in charge of their own investments. It puts a lot more power into the hands of people whose money it actually is, which can only be a good thing. Guaranteed pensions are fantastic if they’re at the right level and it makes financial sense. But giving people the assets back that they’re entitled to is also great, because it puts more wealth into the family’s hands as well.”
In addition to improving access to quality advice, Jaskarn believes technology could help drive down advice costs – if it was better deployed. He argues technology spend is focused on the wrong targets.
“Technology is generally quite poor in advice. Back office integration should be effortless. I understand there are different technology systems and it’s difficult to get them to talk each other. But it should be something we shouldn’t have to get involved in.
At a glance: Investor Profile
Company launched: 2008
Number of clients: 275
Number of staff: Four – adviser, paraplanner and two administrators
In a nutshell: “Investor Profile is all about keeping it simple and low-cost for clients that have relatively straightforward needs. We want to look after the smaller clients that don’t require a full financial planning service.”
“I’m not convinced that where technology firms are pushing their propositions is where clients get the value. If you think of the cost of advice as a whole and what you get for it, a significant cost in an advisory business is the admin function. That could be a lot more cost-effective if IT was better. Where IT people seem to be spending their money is on the front-end, and I don’t think that’s where clients really get the benefit.
“You can get whizzy client interfaces and aggregation systems, but you’re offering this to a client where you’ve spent years telling them they don’t need to look at their investments every day. I’ve never really understood that. If clients were really interested in that stuff, they’d be a DIY investor. It’s a bit mismatched at the moment, I don’t think IT firms are putting the money in the right places to help clients.”
Jaskarn admits the challenge his business can sometimes face is in his reassuring his peers they are doing the right thing by referring clients on. Advisers may have clients they’ve had since the beginning, and can struggle with the concept of letting go of clients in order to improve their business overall.
“It’s a tough situation emotionally, but the opportunity lies in hand-holding everyone through that process, including the adviser. What we find is the adviser can find the process harder than the client. Advisers will have grown their business thinking they need to take on and keep hold of anything that moves, but now they need to think differently.
“That’s tough to let go of clients, clients who helped you grow your business. Yet if we can get over that, there’s a whole bunch of clients we can improve the servicing for. It may be a valuation and review every six months instead of an annual valuation, or a full portfolio versus some managed solutions. We can provide them with much better servicing, if we can just get over that emotional hurdle.”
Ultimately, Jaskarn believes there are lots of clients Investor Profile can help, and by doing so broaden the reach of advice overall. He adds: “We want to make people aware there are companies like us out there, that are willing to look after the smaller guys, when the majority of firms are all about raising your minimum.”