Adviser profile: Nicola Downs of Trentham Invest

Nicola Downs has a bullish and possibly controversial attitude towards pension transfers, and she is not afraid to do things differently at Trentham Invest.

Nicola's CV:

2003–present: Trentham Invest, managing director

2003: Industrial Maintenance Group, credit control

2000–2002: Arbuthnot Pension and Investment, IFA consultant

1998–2006: Director, Briton Management

1998–2000: Giant, Accountants and Financial Services, IFA

1998: Reeves Independent Options, IFA

1995–1998: MGM Advantage Assurance, business development consultant

1992–1995: Norwich Union, financial adviser

Professional memberships and qualifications:

  • FPC 1, 2, 3
  • AFPC G60, G10, G20
  • JO4, 5
  • Member of the Personal Finance Society
  • Member of the CISI

Freeing the geese

Animal lover Nicola Downs has adopted the mission statement ‘free more geese’, meaning transfer more final salary pensions. Given the controversy around pension transfers following the plight of British Steel workers and subsequent regulatory investigation, she knows this is a brave line.

But the director of Surrey-based Trentham Invest has 17 years’ experience as a transfer specialist, having taken G60 in 2001. She believes ardently transferring is a good move for many clients.

She even thinks it is better for the economy since people will have more money to spend and companies will have fewer crippling liabilities.

‘I am fearless,’ she says. ‘I’m the Bear Grylls of pension transfers. Other advisers don’t want to do them because it’s too risky. So they refer them to me.’

Downs uses the geese analogy because she believes many people who leave their final salary pension in a scheme are ‘giving away the goose that lays the golden eggs’.

‘If you free [transfer out] the final salary goose, you will have everlasting eggs,’ she says. ‘In a private pension, if you die, your wife or husband will get the goose and, if you both die, the children get it.

‘In a final salary scheme, the trustees or the scheme rules decide what happens when you die and often the pension’s value is lost or much reduced on death. Transferring also means you have more control over the drawdown rate, the investment engine, and tax issues.’

She says the picture of a Canadian goose in the photos shows what it means to clients. One client – an amateur artist – painted it and gave it to Downs after she helped him transfer two schemes, boosting income substantially over 10 years compared with staying in the schemes.

No guarantees

Developing the firm’s pension transfer niche has helped boost annual income from £360,000 to more than £1 million since Downs last appeared on the New Model Adviser® cover in 2011. But she rebuts any challenge to her increasingly favourable stance on final salary transfers.

Last year, Downs wrote a book: Your final salary pension options: the truth behind the myth. ‘One of the biggest myths is that final salary pension benefits are guaranteed,’ she says.

‘There are no guarantees. If you have a £70,000 a year pension and the scheme fails, which has happened many times, and it goes into the Pension Protection Fund (PPF), you could end up with less than half the amount. That is particularly true for high earners as the PPF cushion is capped depending on age.

‘Many funding shortfalls in companies are staggering, but there is little information about the overall health of schemes unless you know where to dig. Another myth is that when clients transfer out, this makes them vulnerable to stock market falls.

‘But I can predict my portfolios’ risk-adjusted performance accurately over long periods. I can also control the risk with a highly blended portfolio.’

Downs says she receives around 17 enquiries about transfers a year, of which around 15 go ahead with the transfer following her advice process.

The position of the Financial Conduct Authority (FCA) is that an adviser should start from the assumption a defined benefit pension transfer will be unsuitable. Does she disagree?

Downs says much of the poor transfer advice the FCA has identified has been due to the unprofessionalism of the advisers concerned, rather than any fundamental problem with the transfer process if followed correctly.

‘We need to fix the human not the computer,’ she says. ‘I have built my own systems and 10-stage methodology to identify whether transferring is right for the individual. The headline result is a seven-page report explaining our analysis.

‘As well as assessing the individual’s holistic finances, we look at all the technical details of the transferred pension options. These include inherited flexi-access drawdown (FAD); or a nominated FAD with no minimum age for access; minimum access for a Sipp; and tax-free income from drawdown for the client and their spouse and children.

‘My first step is to judge whether the transfer value is a good one. I investigate and judge the ongoing funding position of the scheme. I pull the data together to show the effect of staying with the scheme or transferring at various ages, assuming 4% growth. These numbers will speak for themselves.

‘Plus, I have each case reviewed by an external compliance company specialising in final salary pension transfers – Haven Risk Management – before I meet the client again.’

Testing times

Downs faced a potential crisis around 2012 when four staff left the company in quick succession. She has since replaced them all, added two more and spent much energy on improving team dynamics.

‘I have become more involved with the team and finding the right person for each job, for example, by adopting the Kolbe personality tests. This assesses how people naturally think and operate,’ she says. ‘The new team has more skills, competence and more structure.’

Another influence has been a dog whisperer, which she has been using for the past two years for her own pets. Downs thinks it has taught her a thing or two about the human animal. ‘Humans need leadership just as dogs do, otherwise they…’ she starts growling and baring her teeth.

‘I have applied what I’ve learned from dog whispering with my team [using clearer leadership and communication]. Before I felt a divide between the team and myself. Now I feel in and with the team.’

Downs attends Strategic Coach workshops with Dan Sullivan in Canada four times a year and with David Batchelor in London four times a year. This has helped her conquer the self-belief issues she was struggling with when she was last profiled on these pages.

She says Sullivan taught her to ruthlessly relinquish old habits – even previously successful ones – that were stopping her from taking the business to the next level.

Another important outcome has been improving client segmentation to attract more wealthy clients.

She also plans to start education seminars, as advocated by Batchelor. ‘We cover so many generic topics at each review meeting, such as market changes and budget updates.  Seminars would save lots of time at individual meetings,’ she says.

‘Attendees can ask questions at the seminar or later if they need to. They often hear answers to questions from other attendees they may not have thought of.’

 

The next step

Downs owns Trentham outright and is its sole adviser. The firm’s published profit and loss account shows it retained £40,000 earnings in the year to August 2017, much less than its £400,000 plus profits of recent years.

The difference is the regular £200,000 annual dividends Downs takes (she also takes a £40,000 salary); an additional dividend last year to pay for some building work; and growing reserves to fund a larger new office later this year and potentially recruit a new adviser.

‘We have reached a plateau on income, so we need to move it up again with new staff and premises,’ says Downs.

Support staff receive a basic salary plus bonus based on business written, and non-financial performance.

In 2011, Downs was improving her work-life balance after seven years of working too hard, but her thinking has progressed since then.

‘Work and life go hand in hand. It’s about the quality of your days,’ she says. ‘Hiring a home manager last year was a big leg-up allowing me to spend more time on the business, as that is what I love.

‘The more you invest in yourself, the more productive you are at work. This is another big lesson from Dan.’

Talking to life and business coach Mike Mythen has also made a big difference.

‘My self-belief is a thousand paces forward,’ says Downs. ‘Now, whatever shows up, I can deal with it. But if I need to reset my mind, I talk to Mike. The more you open up and share, the easier life is.’

The fee bit...

Trentham Invest charges fixed fees for an initial review; and between 1% and 3% of the investment for the next part of advice and implementation.

The exact level depends on complexity, size, speed – for example, if there is a looming transfer value deadline – level of client maintenance and contact, and risk.

There is no set maximum initial charge and implementation is always in addition to the initial fee. This means initial and implementation charges together could be £50,000 for a ‘large, speedy, needy and complex’ case, says Downs.

To anyone who calls that expensive, she quotes American firefighter Red Adair: ‘“If you think hiring a professional is expensive, wait until you hire someone who isn’t.” The pension transfer specialism is not for the faint-hearted.’

Trentham also charges 1% ongoing. The ongoing service splits into a four-level matrix, depending on needs. Service variants include: meetings per year (one to four); educational seminars; newsletters; in-house wealth tracker system; and introduction to other recommended professionals.

‘For higher levels, I also recommend local plumbers, gas fitters, even gardeners and travel agents,’ says Downs. ‘It’s like a concierge service.’

She says she does not calculate how long it takes to provide this service on average, nor work it back to an hourly rate. ‘It’s not about hours, it’s about value,’ she says.

The investment bit 

Trentham Invest uses 10 in-house model portfolios and all funds are actively managed.

‘We prefer active because the cumulative difference between top performing and worst performing funds is significant over four years,’ says Downs.

She therefore looks to ‘keep it fresh’ with best-performing, risk-adjusted funds, providing they meet her other criteria.

‘We use Morningstar OBSR and, increasingly, Citywire ratings,’ says Downs. ‘Citywire is well researched and reliable. There is integrity within their commentaries. I also attend the New Model Adviser® annual conference, so I can meet many managers in quick succession, saving me heaps of time.’

Twice a year, Trentham also filters funds on volatility, maximum loss, consistency of performance, information ratio, volatility, maximum loss, and R-squared, which shows how effective the active element is.

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