Outsourcing: Why we use 7IM

As part of Professional Adviser's 'How I am preparing for RDR' series, Jacksons Financial Services' Pete Matthew discusses outsourcing and social media...

Back in 2000, when I first became an IFA after two tied positions, a colleague told me that one day, the minimum qualification standard for advisers would be the AFPC.

I remember a chorus of disagreement from some others at that particular meeting, but at that point I resolved to attain the advanced qualification, which I did in early 2003.

After all, I thought, if this was to be my chosen profession (my dreams of becoming a rock musician having come to naught) then I should become the best I can be.

So when the first consultations on the RDR talked about a minimum standard of chartered, subsequently reduced to level-4, I realised my old colleague had been right, and called to thank her.

Move to RDR

But the RDR is about so much more than qualifications. Adviser charging and capital adequacy are big considerations too. For my colleagues and I at Jacksons, dealing with the impending abolition of commission has been far easier than we thought it would be.

Six years ago we realised there was no consistency in the way we were constructing portfolios for clients and unless we sought discretionary powers, the limitations of the advisory model made us less effective than we would like to be in today’s fast-moving, volatile world. So we set about finding a firm to manage our clients’ money, a discretionary manager with whom we could forge a partnership of best practice.

We would stick to what we are good at – client relationships and planning – and the DFM could deal with the day-to-day money management decisions.

The firm we hit upon was Seven Investment Management (7IM). Six years on, it manages a significant amount of money on behalf of our clients and the relationship works incredibly well. 7IM does not pay commission; instead, any fee agreed between us and the client for implementation is cleanly taken off the investment or invoiced if the client prefers.

This seems so obvious now, but it came as a surprise to me how readily clients accepted this. I always thought we had to butter them up with increased allocation and early exit charges – tragic really.

Partnering with 7IM also made us learn to articulate what we do for clients, and this is something we continue to refine. One of our concerns early on in the relationship with 7IM was that clients might wonder what it is we are doing for them, if we are not managing the money. So we learned to emphasise the value of planning, of relationship and review. Several studies have since found these are the services clients value the most in any case – who knew?