Adviser profile: Jim Aitkenhead, Rob Handford and Alasdair Walker of Hunter Aitkenhead & Walker

A trio of owners at Hunter Aitkenhead & Walker are well on the path to a successful succession

Since Hunter Aitkenhead Walker last appeared as a New Model Adviser® cover star in 2014, the firm has changed its name, brought in a next generation planner to secure its succession and nearly tripled profits.

Managing director Jim Aitkenhead claims he had no great ambitions to become a large advice business, but realised growth was a necessity if he was to achieve his own life plan. Achieving retirement, or semi-retirement, in five years means he needs directors to replace him and to protect the future of staff and clients.

He says hiring the right people can help avoid selling the business and the key is safeguarding the firm’s family and ethical values.

Aitkenhead’s modernisation of this 39-year-old firm, which he gradually took over after joining in 1990, contributed to its inclusion in the New Model Adviser® Top 100 last year.

Since our 2014 profile, Martin Bown Financial Services has rebranded as Hunter Aitkenhead & Walker (HAW) to reflect its current owners. In fact it is quite the family affair. The directors are Aitkenhead; his wife and HR director Alyson Hunter; and his nephew, director and chartered financial planner Alasdair Walker. Last year, new director Rob Handford also joined as a third adviser.

HAW has grown profits from £130,000 four years ago to £342,000 in the year ending March 2018, and a projected £418,000 this year (see business figures). This accelerating growth is due to adding staff, rising stock markets, and the move into higher-net-worth business including defined benefit (DB) transfers, says Aitkenhead.

Meanwhile, several clients with less wealth used the pension freedoms to cash in their savings – often against HAW’s advice – which contributed to a reduction in the number of smaller clients dealing with the business.

‘I like helping smaller clients, so that was not deliberate,’ says Aitkenhead. ‘But it has helped the financial shape of the business with an average DB transfer size of £450,000 coming in.’

Since Hunter Aitkenhead Walker last appeared as a New Model Adviser® cover star in 2014, the firm has changed its name, brought in a next generation planner to secure its succession and nearly tripled profits.

Managing director Jim Aitkenhead claims he had no great ambitions to become a large advice business, but realised growth was a necessity if he was to achieve his own life plan. Achieving retirement, or semi-retirement, in five years means he needs directors to replace him and to protect the future of staff and clients.

He says hiring the right people can help avoid selling the business and the key is safeguarding the firm’s family and ethical values.

Aitkenhead’s modernisation of this 39-year-old firm, which he gradually took over after joining in 1990, contributed to its inclusion in the New Model Adviser® Top 100 last year.

Since our 2014 profile, Martin Bown Financial Services has rebranded as Hunter Aitkenhead & Walker (HAW) to reflect its current owners. In fact it is quite the family affair. The directors are Aitkenhead; his wife and HR director Alyson Hunter; and his nephew, director and chartered financial planner Alasdair Walker. Last year, new director Rob Handford also joined as a third adviser.

HAW has grown profits from £130,000 four years ago to £342,000 in the year ending March 2018, and a projected £418,000 this year (see business figures). This accelerating growth is due to adding staff, rising stock markets, and the move into higher-net-worth business including defined benefit (DB) transfers, says Aitkenhead.

Meanwhile, several clients with less wealth used the pension freedoms to cash in their savings – often against HAW’s advice – which contributed to a reduction in the number of smaller clients dealing with the business.

‘I like helping smaller clients, so that was not deliberate,’ says Aitkenhead. ‘But it has helped the financial shape of the business with an average DB transfer size of £450,000 coming in.’

Managing money

The firm has added £18 million of DB transfer business since 2015. 70% of new DB transfer enquiries end in a recommendation to transfer.

How can it reconcile this percentage with the regulator’s guidance that ‘most consumers will be best advised to keep DB pensions’?

‘We’ve hit a niche of clients who are senior managers, such as retiring bank managers, with high transfer values,’ says Aitkenhead. ‘They recommend us to each other. Many are, to an extent, pre-selecting as they ask specifically for DB transfer work with the aim of [turning their pension into a] family inheritance.

‘The manager types are sufficiently aware financially and can afford the market risk.

‘Rob was previously our external compliance consultant. His expertise is beyond doubt. For example, as a consultant, the regulator hired him numerous times to review or investigate other IFAs. Bringing him in house made sure our compliance is as good as it can be – plus we then hired another external compliance adviser.’

He says the firm has not had a regulatory visit for a few years, but it is currently replying to the Financial Conduct Authority (FCA) questionnaire on transfers. Since the beginning of the year, the regulator has been asking for data from every firm with DB transfer permissions.

The firm charges £925 for a full financial planning report. As with any decision to implement its recommendations, if the transfer goes ahead it waives that fee and charges tiered percentages for implementation and for ongoing service

Managing money (part two)

Handford says: ‘The upfront fee means we only engage people who respect the full financial planning process to ensure our advice is in their best interests. But we charge [a percentage for implementation] because larger amounts require more work and more liability for us.

‘We have no remuneration connected to production targets. The firm is chartered, and all three advisers are chartered and pension transfer specialists.’

Aitkenhead has pension qualification G60; Walker has AF3, AF7 and R08; and Handford has G60, AF3, AF7 and R08.

The firm uses cashflow modelling and Monte Carlo analysis to stress test possible events in the client’s future, including a non-recoverable loss on investment returns, says Handford. ‘The outcome has to pass these stress tests. All advice is reviewed by another planner and we pull each other’s cases apart.’

Aitkenhead says his only issue with DB transfers is renewing professional indemnity (PI) cover. This has become difficult for firms that do lots of transfers, given the perceived higher risks, especially since the British Steel workers’ pension transfer scandal.

‘When we renewed PI 13 months ago, we were regarded as a grade A risk,’ he says. ‘We will probably have a bigger excess and a higher premium. But it is not insurmountable; we’ll get the cover and continue transfers where suitable.’

Managing money (part three)

Aitkenhead continues to modernise to prepare for succession. 18 months ago he retained Phil Bray, founder of The Yardstick Agency, to consult on marketing strategy.

‘Phil completely redid our website and helps us update it with content,’ says Aitkenhead. ‘Since then, traffic has increased threefold.’

Bray also helped HAW run its first Facebook adverts to target its niche of high salaried directors who hold no equity in their firms.

Bray says: ‘Jim’s success comes from embracing new ideas, such as the ongoing client communications we help them create. We surveyed clients, who said they would welcome a newsletter. So we now produce monthly newsletters with open rates of 72%.

‘Jim also recognised he needs to bring on younger talent and has built a great team around him. That will ensure the business grows and thrives. The biggest challenge is understanding where they want to take it in terms of succession. But the firm is well run. Client feedback is fantastic. Among the businesses we work with, it is well placed.’

HAW has also recently taken on consultant Adam Owen to support its succession plan.

‘Adam says we need a more formal business plan and transition plan, so we will be writing those,’ says Aitkenhead. ‘The more we grow the business, the easier the transition will be.

‘With three directors [one of the partners leaving] this is a risk. The next phase is to recruit a paraplanner to help the advisers have more time with clients and who could become a director.’

Getting the message across

Aitkenhead recently listened to recordings of meetings, and identified that ‘we are technically competent, but communication needs to improve’. He hired business transition coach Martin Stiven to train staff on how to hold meetings and engage with clients.

‘Martin says we need to talk less and listen more,’ says Aitkenhead. ‘The prospective customer is then more likely to listen to you.’

Walker, who made it onto this year’s New Model Adviser® Top 35 Next Generation Advisers list, says coaching will be important for the profession to evolve. He is also studying to become a certified business coach.

‘Coaching skills help in knowing when and how to challenge assumptions and get to a deeper level of understanding,’ he says. ‘For example, I had a client talking about needing to retire by 58. You could accept that. But with discussion, I discovered the initial stated reason was not the important factor.’

Walker is a prominent member of the NextGen Planners group. He has also recently joined the Personal Finance Society practitioner panel. He says he aims to help shape best practice through developing continuing professional development materials and events, and to help improve public access to financial planning.

‘Having an open remit and a loud and prominent voice advocating “pure financial planning” to the profession is a fantastic tool,’ he says. ‘The more advisers engage with planning, the more the public get access to it.’

Handing over

Aitkenhead and Hunter own 86% of the firm; Walker has a 10% stake; and Handford owns 4%. To encourage retention, the latter two have options that will take their combined ownership to 40%.

Handford and Walker receive a salary plus some dividends and shares. Aitkenhead and Hunter tend to take more dividends. Dividends and drawings are not included in the cost figures, right. Aitkenhead prefers not to disclose amounts but last year’s accounts record dividend payments of £184,000.

For now, the aim is to keep growing. ‘The tailwind of a kind market has gone,’ says Aitkenhead. ‘However, with three advisers and the marketing effort, we’re still bringing in new clients with significant investments.’

If he can hire another potential director and keep the transfer business on the right side of the regulator and insurers, he should achieve a smooth business handover as well.

The fee bit...

HAW publishes all its fees on its website with a calculator. ‘The calculator has lost us clients, even though I believe our fees are slightly below average, because they have nothing to compare it to,’ says Aitkenhead. ‘We keep it because we want to be open.

‘According to The Yardstick Agency’s research, only 17% of adviser websites mention fees and only 5% disclose in detail the likely fee paid by a client. What are the others hiding?’

The firm’s initial report fee of £925 is waived if the client moves to implementation, which is 1.5% for the first £250,000; 0.5% on the next £250,000; 0.25% on the next £500,000; and 0.15% above £1 million.

Ongoing fees vary between ‘premium’ and ‘managed’ services. They are 0.9% or 0.75% respectively for the first £250,000; 0.75%/0.6% on the next £250,000; 0.7%/0.55% on the next £500,000; and 0.65%/0.5% above £1 million.

A client with £100,000 to invest who needs a financial planning service could expect to pay £1,500 for implementation and between £750 and £900 as an ongoing fee in the first year.

Premium service clients receive quarterly investment reviews, and annual financial planning meeting and reports. Managed service clients receive annual planning meetings and annual investment and objectives reports.

HAW also offers ad-hoc advice based on an hourly rate of £185. While clients will value the creation of financial plans, Aitkenhead says it is implementation that really costs the business, calling it ‘often complex and time-consuming’.

The investment bit...

HAW adjusts DFM’s asset allocation but moving everyone to Parmenion is its project

HAW has around 50% of assets with discretionary fund manager Parmenion.

The other 50% is spread across the firm’s panel of model portfolios and a panel of funds. Where HAW feels it is appropriate to build an advisory portfolio (rather than buy a multi-asset solution), the adviser builds the asset allocation through selecting from the funds on the panel.

The committee members contribute ideas for funds for consideration. To make the panel, funds must meet a series of quantitative tests. The panel is reviewed quarterly and funds that breach its ‘quants’ are considered for ‘hold’ or ‘sell’ status. The firm uses FE Analytics to manage the panel.

Funds are sometimes replaced in favour of new funds that are better value, or whose style better fits with the committee’s economic outlook. The investment committee (HAW plus managers from Parmenion) meets quarterly.

The firm has not made many such changes in the past six months because the portfolios were already the most conservative they have been since inception nearly 10 years ago. For example, the Cautious portfolio already has 14% in cash, says Aitkenhead. This positioned them well for current volatility.

‘The only change in the past six months was in early October,’ says Aitkenhead. ‘We bought some UK equities as the FTSE 100 fell under 7000 and we thought they were good value.’

The CVs (part one)

Jim Aitkenhead

1990–present: Hunter Aitkenhead & Walker, managing director

1988–1990: Scottish Amicable, broker consultant

1985–1988: GA Life, senior life consultant

1983–1985: GA Life, life inspector

1982–1983: GA Life, trainee life inspector

1981–1982: GA Group, graduate trainee

Professional memberships and qualifications

  • Member of Chartered Insurance Institute
  • Member of Personal Finance Society
  • Chartered Financial Planner
  • Associate of the Chartered Institute for Securities & Investments

The CVs (part two)

Rob Handford

2017–present: Hunter Aitkenhead & Walker, chartered financial planner, director, compliance oversight

2002–present: Retail financial advice operations consultant, financial adviser and pension transfer specialist

1999–2001: Westerby Investment Management, pensions technical adviser

1996–1999: Bland Bankart, pensions team leader

1994–1996: Pearl, technical services

1990–1994: Standard Life, broker support

1987–1990: Pointon York, group pensions administrator

Professional memberships/qualifications

  • Fellow of the Personal Financial Society
  • Chartered Financial Planner

 

The CVs 

Alasdair Walker 

2014–present: Hunter Aitkenhead & Walker, director

2011–2014: Hunter Aitkenhead & Walker, financial planner

2009–2011: HSBC, credit officer

Professional memberships and qualifications:

  • Fellow of the Personal Financial Society

Twitter

You can follow Alasdair Walker on Twitter using the handle @financialwalker.

Here are select highlights from his feed:

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