Pressures on wealth managers, from regulation to technology, are undoubtedly increasing, yet Andy Grant, head of financial planning, Tilney Group has a two-pronged response.
He is fostering ntegration between financial planning and wealth management, via multiple channels. And he is helping Tilney continue to acquire firms to add scale and drive efficiencies.
A former amateur GT racing driver, Grant joined Tilney last August and was quick off the grid in introducing a cross-functional management structure in each of the firm’s 30 offices to boost cooperation between wealth management and financial planning.
He also revved up growth quickly, acquiring two firms by December ― Midlands-based Index Wealth Management and the wealth business of accountant Moore Stephens ― which together added £500 million funds under management. Total funds at Tilney now stand at £23 billion.
Grant came to Tilney with extensive experience, having worked for UBS Wealth Management for 10 years, ending as managing director. He then took senior operations roles at Royal London and The British Bank.
‘[Before joining Tilney, I spoke to its board] and was impressed with the opportunity to build a business based on the integration of financial planning and investment management, setting ambitious targets for capabilities and scale,’ he says.
‘At UBS, I worked across functions and, even then, felt we should integrate wealth management with financial planning to create a more holistic approach. The asset plan is great, but even better if it’s in the context of a lifetime financial plan.
'We will continue to develop that at Tilney, and combine it with our strength in scale, with over 300 financial planners and paraplanners. Some companies have more of one or the other, but both together in scale is exciting and different.’
Buying financial planning firms in a hurry can be risky as many have issues lurking in their history. Grant has been involved in several acquisitions at previous companies and admits not all have been successful.
‘But we do the same due diligence that every business does ― an experienced group going through a detailed process,’ he says.
‘When an acquisition opportunity arises, you need to ensure that you share a vision with the owners. It can go wrong when interests are not aligned. With the latest acquisitions, we established beforehand that we all wanted the same future business, for example, in how to be client-centric and deliver high quality financial planning.’
Grant is keeping his foot on the accelerator though and says Tilney is not pausing for breath after its latest purchases.
‘Wealth managers are focusing on financial planning,’ he says. ‘The economies of scale in wealth management make it harder to operate as a smaller firm. Putting those two together, it makes sense to converse with financial planning firms who realise joining a bigger business is better.
'We don’t want to hoover up every firm. But when we see something we like, it’s natural to explore [the options].
‘Individual planners who have joined us appreciate the breadth and depth of our support resources. Investing in technology and a diverse range of [skills and services] is much easier with scale.’
One criticism of large consolidators is that they often centralise processes, including the investment proposition, to create cost efficiency ― some say at the expense of more personalised service for clients.
‘I don’t think the ability to focus on clients’ needs is related to the size of the business,’ Grant responds.
‘To address client requirements, you need a range of capabilities and to make it work economically you need scale. But culture makes a company client-centric, not size.’
Grant describes Tilney’s financial planning model as ‘holistic ― understanding the whole life and financial journey of an individual or family’.
The firm’s biggest areas are high net worth families, business owners, serious injury cases, non-domiciles, and partners in legal and accountancy firms. Grant says he particularly wants to develop the latter.
‘Partners in professional firms have specific needs during their rapidly moving careers,’ he says.
‘The top 10 law and accountancy firms have thousands of partners between them, accumulating significant wealth during their careers. We often find their financial needs are poorly catered for, and they don’t have time to do it themselves. To attract them, we have relationships with several firms, sit on panels or go through client referral.’
Grants wants to increase focus on specialist areas of financial advice. Tilney already has many technical specialists, including in later life planning, investment planning for charities, and estate planning.
‘My focus is to segment the market by the needs and attitudes of different groups ― for example, through providing our specialisms to specific groups and anticipating their needs with something more immediately relevant and bespoke,’ says Grant. ‘It’s not enough to offer general financial planning and investment management.
‘The industry tends to segment clients according to size of wallet. But most clients choose advisers who understand their attitude, such as whether they are confident, fearful, or concerned. As part of this, planners must be able to empathise, listen effectively and tune in to the needs they are expressing.
‘For example, people in later life tend to have different and complex attitudes compared to others, so we have Society of Later Life Advisers (Solla) qualified people who understand that.
'We also run an academy that builds these skills ― not just to understand technical cash flow planning or products, but to listen and identify with a client in their life journey, which is the heart of it.’
Tilney made an overall pre-tax loss of £9.5 million in 2017, due to heavy investment in acquisition and technology. In particular, it spent £16 million on new technology over the last two years to replace legacy systems that build up as acquisitions were made. This includes migration to a new integrated wealth management platform.
The comparable total profit figure for 2018 is not yet available. However, we do know it had healthy net inflows of £549 million last year. Also, strong relative investment performance mitigated the market losses in the last quarter of 2018, with Tilney portfolios falling -5.9% compared to -11.7% in global equities and -7.95% in the MSCI WMA Private Investor Balanced index.
Tilney says its portfolios also beat their Asset Risk Consultants benchmarks over the last year.
The partial results Tilney has published reveal revenue rose to £228.9 million last year, up from £226.5 million in 2017, while operating profit grew from £18.3 million to £22.9 million.
Grant says he wants to make this investment in technology pay dividends now. Tilney already owns online-focused fund shop Bestinvest, and has a client portal, but Grant says he wants to develop Tilney’s technological and web-based capabilities further and provide a more seamless experience across different channels.
In contrast to the fast pace of life in the office, Grant prefers a more relaxed way of life when away from work. He is no longer involved in motor racing and prefers to spend weekends relaxing with his wife, three children and two beagles. He does, however, remain energised by hard work, he says.
‘I find it exciting that financial planning is increasingly part of the wealth management offering and I’m looking forward to finding other ways to differentiate,’ he adds.
At this speed, it will not be long before he makes another bold manoeuvre.