Kim Barrett: How I am preparing for RDR

Kim Barrett, senior partner at Barretts Financial Solutions, explains how he and his son have set about re-shaping their business.

It was as long ago as late 2008 when my son, my partner, and I sat down and discussed where we were headed as a financial services practice. Our income for the year soon to end was running at dangerously low levels, to a point where it seriously questioned whether it was economical for us to continue to run our practice.

Many things had led to us reaching this low point. We moved the practice in June 2007 and were thus not known in our new catchment area. My son had joined the business in April 2007 and thus the income from the practice was now supporting the two of us. Not forgetting also that for much of the time my son had been working in the practice he had been studying, and passing, exams in order to place himself in a position to advise clients.

Amongst all of this apparent gloom, fate took its hand!

For reasons neither he, nor I, am fully aware my son found his vocation. He has a passion for matters investment and has an achievable aim to attain Chartered status within the chartered Institute of Securities and Investments. He already holds the Investment Management Certificate.

We also took the view that a typical financial services practice has a ‘busted’ business model, i.e. their outgoings are constant in the form of regulatory fees, professional indemnity costs, office costs, and business overheads; whereas their income stream can be erratic, i.e. income is only received when something is ‘sold’ to a client.

To address this we set about changing our business model so we could receive an income from our clients on a consistent basis so ensuring that if our clients needed our services at any time, we were here to help and had the financial resources to fund our outgoings.

Setting fees

My son and I have had many conversations regarding the charging of fees than I care to recall but we seem to have settled upon a fee tariff that is now workable.
It was about this time that we were introduced to another financial adviser, who was trying to sell us clients he no longer wished to service. He explained to us how he dealt with his ‘better grade’ clients using the Transact platform. I had heard of the ‘wrapper’ service offered by Transact previously but had not sought to investigate it further. My son was hooked!

With the necessary ingredients in place, that is my son’s increasing investment expertise, allied to a fee charging structure, and a ‘wrapper’ we believed was perfect for our clients, we set up our wealth management service.

We set about engaging our valued clients and encouraging them to the benefits of the new wealth management service and we were delighted with the success we had. This provided us with the confidence that we were doing the right thing. The transparency of fees is a breath of fresh air, although we have enjoyed some very pointed, and fruity, conversations with clients about introducing them.