‘New Year, new you.’ While most of us greet January with solemn vows to eat better, exercise more and never drink again, Jarrovian Wealth is preparing to start new business habits.
The eight-person wealth management and financial planning business, located on London’s City Road, is clicking the pieces into place. The firm is about to roll out a partnership model, ‘Pod’, created to attract advisers and their businesses to join the Jarrovian fold.
And it is about to add to its investment proposition, using discretionary and platform permissions that it has had since the business began, but has waited until now to use. Alongside its cadre of discretionary fund manager (DFM) partners, it will launch its own Oeic-wrapped model portfolios (see investment box on page 27).
As chief operating officer Mahfooz (Maz) Shamsuddin says, rather than rushing headfirst into a proposition that used these functions, which could have resulted in wrong pricing and overcharging, the firm has been ‘putting the jigsaw pieces together’.
And in December all staff became shareholders, as part of what chief executive Graeme Price calls Jarrovian’s ‘open book business’. Another piece of the puzzle.
The right blend
The firm was founded in 2017 by Price and Shamsuddin, who were joined by financial planners Adam Young and Chris Salacinski. Readers may remember Young from two previous firms. He ran Dragonfly Planning before moving to join fellow planner Stuart Poonawala at Kubera Wealth.
Young already knew Price professionally: he was Young’s client while at UBS.
This blend of backgrounds, purist financial planning and private banking, directly informs the team’s approach. ‘We are tech savvy, financial planning-led wealth managers,’ Price says. ‘That’s a horrible mouthful, but it’s what we are. Sometimes it is appropriate to use a product and sometimes best to do absolutely nothing but offer reassurance, albeit a valuable thing in itself.’
The blueprints of the business had been written down years ago. While at UBS, Price had written a white paper on how financial planning firms could adopt some of the services and functions provided by private banks. Or as Young puts it: ‘how we make institutional blend with retail, in a sort of cosy fashion.’
Like most modern financial planning firms, Young describes Jarrovian as ‘client centric’ and ‘not coming from a product perspective’. Another description he adds is ‘consultancy-driven’. Price references an Albert Einstein quote: ‘Not everything that counts can be counted and not everything that can be counted counts.’
The next pod cast
The financial adviser profession is ageing, however. ‘Say a client comes to the firm who is in their early 50s. They are looking to sell their business and they have kids who are in their early 20s,’ says Price. ‘With the best will in the world, Adam’s probably not the most appropriate person to deal with them. They are going to be retired. It’s more likely to be somebody who’s within 10 years either side of their age bracket.’
Jarrovian has already taken on two graduates, paraplanner Francesca Smith, who studied maths and economics at Exeter University, and Hassan Choudry, a graduate in accounting and finance from the University of Hertfordshire.
Planner and investment analyst Farida Hassanali joined the profession in 2007 straight from Loughborough University, became an adviser in 2018 with Jarrovian and also last year appeared on New Model Adviser®’s list of the Top 35 Next Generation Advisers.
The firm also has a current student from Sheffield Hallam University working as part of a placement, and Jarrovian is interviewing for next year’s placement already.
But the firm is not planning to rely on a graduate intake for growth. It has a structure called ‘Pod’ that will allow advisers to join as employees but also bring their business in under Jarrovian’s processes.
Young and Salacinski are the prototype: Pod 1. They joined from Kubera in 2017 and brought their clients over. Pod 2 will run with its own profit and loss, and has begun already. Salacinski says Jarrovian is in discussions with ‘six to eight financial planners or firms’. Unlike a network-type model those businesses will not join as appointed representatives.
‘We want like-minded financial planners to benefit from the work we have done from a back-office perspective so they can do what they do best; provide the best financial planning for their clients,’ says Salacinski.
He says he is offering ‘institutional back-office processes to the high end, but usually small financial planners’. This is quite a claim for a firm that is just two years old. Firms that have been grappling with their processes for years may wonder how Jarrovian has achieved that in such a short amount of time. ‘Dedication to the cause is how,’ he says.
Price says: ‘It is not just mapping processes. It is embedding it into your workflow so you can see precisely where things are and what’s going on.’ He adds: ‘Jarrovian’s run effectively, by a series of committees, where people are allocated tasks. Another failing of a small business is that everybody gets involved in everything. That’s not what we do here.’
There is staff engagement too, says Salacinski. ‘I think we’re almost in the third or fourth permutation of processes in the back office. The first one didn’t work, [so we asked] is there a better way?’
With Pod 2, will Jarrovian be buying businesses? ‘Not in the conventional sense,’ says Salacinski. ‘No money is changing hands.
‘We have created shares for Pod 2 dependant on the value of business they are bringing in, thus diluting original shareholders’ shareholding. The same will likely occur for the other Pods joining forces with us. So even though shareholdings are diluted, by the very nature of the business growing, shareholder value improves.’
Breaking down barriers
Jarrovian has its own mantra written up on the office whiteboard: ‘We help our clients plan and achieve their desired lifestyle. Once achieved, we help maintain and protect their lifestyle through life’s trials and tribulations.’
Midway through our interview, Price quotes cleric and theologian John Wesley: ‘“Do all the good you can, by all the means you can, in all the ways you can, in all the places you can, at all the times you can, to all the people you can, as long as you ever can.”
‘So, in other words, if you do everything in your power to ensure your clients achieve their goals, aspirations, give them the reassurance and comfort that you’re there for them to give guidance and succour when they need it, everything will fall into place. Don’t chase the money,’ he says.
There is thoughtfulness about Price. Philosophical even. Did he have a religious upbringing? ‘Spiritual yes, but I wouldn’t say traditionally religion,’ he replies. ‘Although, my father was a choirmaster [in Jarrow, hence the firm’s name].’
Price’s father was an engineer building the wings for Concorde, the supersonic jet. Concorde was a true feat of engineering, breaking new ground as well as the sound barrier. But it did not fit well into the aviation industry that existed at the time; it was costly and became a novelty product.
When it was retired, no one saw the value in replicating it. With all Jarrovian’s claims to be doing things differently, is there a comparison?
That would be unfair. The advice profession is a collection of businesses that all do things differently to one another, to a greater or lesser degree. And these pages have previously showcased firms similarly adopting platform-like capabilities along with their own discretionary powers. Other firms are even creating their own funds, though this is not a route Jarrovian agrees with.
‘We have big plans for the future, but we’re not intending to take over the world,’ says Young. ‘We just want to make sure we can reach more and more families, and not compromise the services we provide to those people we already look after.’
Salacinski adds: ‘I think if you do good things for clients, good things will happen to you.’ Price replies: ‘Karma is a good description. I think there is a general belief in karma.’ ‘Yes,’ says Salacinski, ‘spelled c-a-l-m-e-r.’
The fee bit...
Client 1: Financial planning with, typically, more than £500,000 to invest.
Financial plan: £1,750 fixed fee. Implementation fee: either 1% on assets up to £1 million or 0.25% above that. Alternatively, clients can agree a fixed fee. Its ongoing service agreement is for a £2,500 a year flat fee, plus an ongoing ‘asset oversight’ charge of 0.35%. So a £500,000 client could pay £11,000 in their first year, or 2.2%.
Client 2: A more hands-off service without cashflow analysis. Typically people with less than £500,000 to invest. No cashflow analysis at the beginning, so no financial plan fee.
Any project work that follows would be implemented at 1%, if there is money to be invested, or a flat fee. A ‘general oversight’ service can be bought for 0.75% per year. So a £250,000 client, for example, could pay £6,125 in their first year.
Any subsequent cashflow analysis costs £500, a shortened version of the financial planning report.
Client 3: Like Client 1 but without any investable assets. Exactly the same fees but no asset oversight charge.
Jarrovian has some fixed fee-only clients, and ‘that tends to be towards the upper end of the scale, where basis points are not appropriate’, Price says.
Shamsuddin describes the structure as having ‘decency limits’. ‘It’s all about ensuring we’re not overcharging. The clients are paying the bare minimums where possible to ensure it’s efficient and effective.’
The investment box...
Jarrovian runs an outsourcing model but is soon to add to this with its own range of Oeics. The firm outsources to a panel of DFMs, matching a client’s investment requirements with a provider’s particular strengths and style. For example, its directors say, people who just want to maintain their wealth might suit a different DFM to someone who has an ‘ambitious’ target that would need to beat market returns. Someone in retirement, with philanthropic goals and social impact aims, may have other needs.
To make the panel, DFMs must fulfil several criteria, such as subscribing to Asset Risk Consultants data. It is also crucial for Jarrovian that any DFM providing a bespoke offering must do so on what is called the client as client basis. The alternative, agent as client, is where the DFM does not have a direct relationship with the client, in a regulatory sense.
‘It’s a bit like, why keep a dog and bark yourself? All the liability sits with you,’ says Price. ‘There’s less risk in having your own discretionary permissions and taking that liability fully.’
DFMs currently on the panel include Quilter Cheviot, Rathbones, Rowan Darlington, UBS and Vestra.
But Jarrovian will soon be offering an alternative in the guise of its own Oeics. According to Salacinski, this option will be for clients the firm wants to advise but who do not have the high level of assets many of its current clients using DFMs have. These clients are often referred to as Henrys: high earning, not rich yet. Salacinski says a typical income for such people would be £100,000 and they are clients the firm would like to ‘incubate’.
Jarrovian launched with discretionary and platform permissions and is now going to use them. It will find a custodian and will buy in research, and a range of risk-rated Oeics will be launched in April with Jarrovian setting asset allocations.
‘We’re looking at it as an appropriate tax wrapper,’ says Salacinski, ‘you control cost. So, it’s very simple.’
Mahfooz Shamsuddin's CV:
2017–present: Jarrovian Wealth, chief operating officer
2009–2017: UBS Wealth Management, director/business manager
2003–2007: Citi Bank, senior relationship manager
2001–2003: HSBC Bank UK, customer services officer
Graeme Price's CV:
2017–present: Jarrovian Wealth, chief executive
2007-2017: UBS Wealth Management, executive director, UK strategic partnerships
1990–2007: AXA Sun Life, account director
Adam Young's CV:
2017–present: Jarrovian Wealth, financial planner
2014–2017: Kubera Wealth, strategic financial planner
2009–2013: Dragonfly Planning, managing director
1993–2002: GIS Financial Services, financial adviser and manager