From small beginnings, Trevor Cowburn’s advisory business went through mixed fortunes until he set up Leeds-based IFA Ltd. Now, after an inspirational meeting with Julie Lord, he is working his way towards retirement through a five-year exit plan aimed at moving onto platforms and increasing recurring income.
As brand names go, IFA Ltd is admirably concise – like the Ronseal of financial services, it does exactly what it says on the tin. But 25 years into his advisory career, director Trevor Cowburn is subtly transforming the business as he prepares for retirement, and along with the transformation, the brand is being refined.
The company’s new brand, IFA Wealth Management, more closely reflects the service it provides to clients, says Cowburn. The changes are more than skin deep, however. Cowburn is in the process of moving the Leeds-based business towards a revenue base on assets under management, and aims to transfer his clients’ £40 million of assets onto platforms that will enable him to do so efficiently.
Cowburn reached another silver anniversary this year: that of his marriage to Lyn, who works with him as the company’s finance director. The two recently celebrated the milestone with three weeks in Italy. ‘It was the longest holiday we’ve ever been on,’ Cowburn says. ‘I quite enjoyed it. More and longer holidays are definitely on the cards. ‘And perhaps cutting to a four-day week,’ he adds, clearly having acquired a taste for free time after a quarter of a century of frequent 12-hour days.
Not so long ago, Cowburn freely admits, cutting back would have seemed unthinkable, but an idle conversation with Lyn one evening set him thinking.
‘Nearly two years ago we were going home and she came out of the blue with "what do you think you’ll be doing five years from now?", and I said "the same as I’m doing now",’ he recalls. ‘And she said, "so you don’t plan on spending time in retirement with me?". I realised that wasn’t a very clever answer.
‘That’s when it dawned on me that unless I develop an exit strategy, not only does it have an effect on Lyn, but it also affects the others,’ he says, referring to his employees. A ‘five year plan’ was hatched, which gradually evolved into his current goal of having the option to retire on his 60th birthday in March 2010.
Nothing is set in stone, Cowburn says, though despite advances from the likes of St. James’s Place he has decided against selling the business to an outsider.
Origins and evolution
The business has certainly come a long way from its beginnings in Cowburn’s bedroom as TA Cowburn & Co. – the ‘company’ being his dog, he jokes. Prior to striking out on his own, he was a director of local insurance broker Fielding Mann, which had been formed by merger. ‘North Leeds had a very strong Jewish community. You were either a Mann client or a Fielding client. But people who were Mann clients didn’t like Mr Fielding and people who were Fielding clients didn’t like Mr Mann,’ he says.
Sensing unease in the business, Cowburn took the opportunity to leave, taking many of Fielding’s disaffected clients with him – some of whom are still customers.
At that time Lyn left her job at the Department of Health and Social Security to help with the business on a ‘temporary’ basis and ‘25 years later and she’s still here’, Cowburn grins.
Six months into the business, he was approached by a former colleague who wanted to join. The two recruited another former colleague and formed CGB Insurance Brokers, a decision Cowburn describes as a ‘big mistake’. His two partners underperformed, dragging his income down so far that, ironically, he had to sell part of his stake to them.
Breaking free of the partnership, he set up Sceptre Investment Managers, but the stock market crash of 1987 slowed investment business causing him to focus more on personal pensions when they became available in 1988. Today, Cowburn estimates pensions account for up to 70% of his firm’s business.
As a result of the shift towards pensions, the business changed name again to The Cowburn Partnership. By the mid-1990s, business was sufficiently brisk that Cowburn was able to bring in a partner, Geoff Milner, whereupon Cowburn Milner & Co. Ltd was formed.
Another mistake
Cowburn then made a second mistake. Fed up with the growing burden of regulation, he sought a safe haven in the form of Berkeley Independent Advisers, the ill-fated network headed by Cliff Lockyer. On the collapse of BIA in 2002 – ‘Mr Lockyer got his just deserts; he’s probably selling double glazing’ – Cowburn moved to Whitechurch, but soon tired of what he says were unreasonable compliance demands and sought a return to directly authorised status.
Having known SimplyBiz founder and chairman Ken Davy from an industry committee on which they both served, Cowburn was confident that the support services provider was the way forward and he became directly authorised in November 2005. During that period he and Lyn had bought the brand new offices in which the business is currently located, in the secluded Bramley Grange development surrounded by private parkland.
By this stage Milner had long since left, but before his departure in 2001 he had been experimenting with website domain names and had realised that the potentially lucrative www.ifa.ltd.uk was up for grabs. Having reserved the domain, Cowburn excitedly phoned Companies House to see if IFA Ltd was taken. Discovering it was not, he drove to the Leeds branch and paid £100 to change the company name there and then.
‘We’ve had a lot of names,’ he says. ‘But we’re staying as we are now.’
Developing the business
The combination of new offices and direct authorisation set Cowburn thinking afresh about the business’s future. In particular the shift towards new model financial planning resonated with his own convictions. But he realised he did not have all the answers and sought to learn from fellow advisers who had been successful in their own business development.
‘I had read about Julie Lord working a four-day week with only herself as an adviser, with four paraplanners, turning over £750,000 a year. And I thought, if she can do that, I’m doing something wrong!’ he recalls. ‘So I phoned her up and went to Cardiff, and we had a meeting.’
Lord emphasised the importance of knowing the market and knowing what service to provide to that market. Cowburn had not yet consciously set out a business proposition but he left with the realisation that he already knew what it was: in a nutshell, managing the wealth of higher rate taxpayers and their families. ‘That’s the way it evolved,’ he says.
Further changes
More developments were yet to come. ‘Eighteen months ago, this was the big change (I’m still not sure if this was deliberate): we put feelers out for either a paraplanner or another IFA,’ Cowburn says. As a result, he took on both Stewart Kidson and Mark Coughlin, who now work alongside him and adviser Keith Jackson. ‘We’ve developed very well together as a team,’ Cowburn says. Coughlin supports Cowburn in a paraplanner role and assists Kidson and Jackson under the job title (which he picked for himself) of head of research.
Kidson, in addition to advising clients, adopted the head of marketing mantle after orchestrating a successful email campaign to local media companies. ‘They seem to be very keen on "heads" around here,’ Cowburn laughs. One example of the informal atmosphere that pervades the office is that Lyn, not to be left out, was appointed ‘head of gardening’. Cowburn jokes that he is the ‘gardener’s assistant’.
The business also employs mortgage adviser Keeley Mabbott and administrative staff Tara Edwards and Pete Hodges, the first two on a part-time basis.
Teamwork is an important element of the business, says Cowburn – not least because it allows him to take a more strategic view of its development.
CV: Trevor Cowburn
Career
- 1968 – 1970 Trainee print sales representative, Wiggins Teape
- 1970 – 1972 Administration clerk, Sun Life
- 1972 – 1973 Trainee inspector, Phoenix
- 1973 – 1977 Insurance broker consultant, Noble Lowndes & Partners
- 1977 – 1983 Life & Pensions Manager, S. Fielding (Life & Pensions Brokers) Ltd
- 1983 – present Founded TA Cowburn & Company Insurance Brokers, now IFA Ltd
Qualifications
Interests
Metamorphosis under way
The cornerstone of the transformation into a fully fledged wealth management business is the company’s new client agreement. Previously, IFA Ltd monitored clients’ funds without charging for the work, but Cowburn says the process was ‘unscientific’. Having taken Coughlin on board, he is now in a position to develop it into a proper wealth management service.
‘We now have two different levels of service,’ he says. Standard service is the traditional option, with clients paying by fee or commission (Cowburn is unconvinced by fees and will generally take 3% commission plus 0.5% trail, with discounts for larger transactions) for advice requested. Premier service includes regular fund monitoring and an annual review for 0.5% a year.
‘What it’s really saying is: we don’t want any standard clients. This is our move towards segmentation,’ Cowburn says. He has yet to take the proposition to the company’s entire client base – between Jackson, Kidson and himself there are about 750 active clients – but says he would be surprised if many people chose the standard service when given the choice.
‘The clients are going to vote themselves into the premier service level.’ He admits, however, that removing clients he cannot afford to advise will be ‘a bit of a hatchet job’ in
some cases.
A typical client would be a company director earning upwards of £100,000 – self-employed clients tend to be harder work, Cowburn says – though IFA Ltd also advises a number of small local businesses.
The move to platforms
Parallel to the process of segmentation is that of consolidating client assets onto platforms and focusing on a smaller range of funds. ‘We have about £3.5 million with FundsNetwork and about £1 million with Cofunds,’ he says. The plan is to develop a sustainable income stream by transferring the rest of the £40 million the company currently advises onto platforms, then focusing on building it up in size.
Recurring income stands at 25% of the total, having steadily risen each year, but moving to fund-based income should increase this figure further, Cowburn says.
The hard part is choosing platforms. Several years ago Cowburn attended a SimplyBiz presentation on The Bigger Picture, the wrap developed by Norwich Union-owned Lifetime. Despite only having had good experience with SimplyBiz recommendations, he was not convinced, and his caution paid off when Lifetime became effectively defunct amid a chorus of complaints.
Having been underwhelmed with the levels of service from Skandia in recent years, he has no plans to use the Selestia Investment Solutions platform either. And, although his clients have a sizeable chunk invested through Fidelity FundsNetwork, his experience of trying to persuade a Fidelity representative to visit a small business like his dissuaded him from committing further funds to the platform.
Eventually it became a process of elimination. ‘We’ve concluded that because Cofunds is independent – it’s not [totally] owned by a big company that’s got its own agenda –we’re going to give it another go,’ he says.
‘In a way, for me it doesn’t matter. It’s more for this lot,’ he continues, gesturing towards his staff. ‘Because they are at this all day long. The technology business development side of things is really Lyn’s job.’
The Sipp strand
Another ongoing business development is the creation of a white-label Sipp, having registered the IFA Sipp Select company name and www.sippselect.com website alongside the IFA Wealth Management brand. ‘We’ve been trying to identify a Sipp provider that we’re satisfied with,’ he says. ‘We’ve got Sipps with AJ Bell, had Sipps with Barnett Waddingham, with James Hay, SIPPcentre, and broadly speaking we haven’t been entirely satisfied with any of those providers.
But after extensive research he is confident of having found the right provider in the form of South Wirral-based MW Pensions, and expects to formalise the relationship within a few weeks.
The IFA Sipp Select brand is an advertising tool rather than a separate business, designed to take advantage of public awareness of Sipps on the back of advertising campaigns by bigger rivals. But there is no guarantee Cowburn will use it – with a steadily growing client bank through word-of-mouth referrals, there may be no need, he says.
Cowburn is a Sipp evangelist, describing them as ‘super ISAs’. ‘I’m firmly of the belief that this business could succeed quite satisfactorily doing nothing but Sipps,’ he says.
More generally, educating clients and their families about saving for retirement is something of a passion. ‘I’m a pensions fanatic,’ he says. ‘The lack of contributions going into pensions is a national tragedy.’
Rage against the machine
One of the striking things about Cowburn’s desk, groaning under a mountain of neatly stacked files, is that he does not like computers one bit. ‘I don’t do computers. I hate the bloody things. It’s not my job to sit at a keyboard bashing away,’ he says.
‘This is my laptop,’ he laughs, brandishing a folder full of documents. ‘I’m a complete Luddite. But computers in the modern world have turned people’s brains into mush.’
The business does make full use of technology for fund research, compliance procedures, client management and so on, however. ‘We’ve got 1st Software, which people tell me is very good,’ says Cowburn. But he prefers not to get involved; he does not have an email address, for example.
The trait does not run in the family: his two sons both work extensively with technology. Piers, 23, works as a graphic designer who designed IFA Ltd’s company logo and website. He is also a singer in a band called Maths Class, which gained publicity through social networking site MySpace. Gerrard, 20, is the product technical manager at a telecommunications company.
For Cowburn, however, financial advice is about people and about finding creative solutions to their problems. ‘Maybe I’ve just adopted it to be obtuse, but I do believe that you lose creativity by staring at a screen all day,’ he says.
Active fund management fan
Cowburn’s suspicion of the inanimate extends to the current debate over investment philosophy. He is a staunch defender of active fund management and is sceptical of the new orthodoxy on asset allocation. ‘People talk about asset allocation as though it were the key to Utopia – that as long as you get the asset allocation right, you can use passive instruments where there’s no knowledgable input,’ he says. ‘To me, that’s like saying – and some might argue this is the case – that you could invent a driverless car that would get more podiums than Michael Schumacher. It bloody well won’t! And it won’t beat Lewis Hamilton either.’
He is familiar with the arguments and acknowledges that successful fund managers are rare. But, as he says, ‘arguments are rife when facts are scarce’. Identifying talented fund managers, such as M&G’s Graham French (a prominent figure in many of his clients’ portfolios), has enabled him to deliver far greater returns than any mere tracker could, he says. ‘‘I’m a great appreciator of talent.’
The passive investment philosophy is perhaps most clearly espoused by Evidence Based Investment Solutions (Ebis), the group of financial planners inspired by US-based Zero Alpha Group. ‘Ebis are basically throwing down the gauntlet to the actively managed mentality. They can keep their trackers and asset allocation model rebalancing – we’re in for talented active fund managers,’ says Cowburn. Rebalancing – periodically diverting funds from the best performing elements of a portfolio into the worst – strikes him as fundamentally absurd.
He is equally scathing about the emerging lifestyle fund industry, seeing it as the adviser’s job, rather than that of an algorithm within a tool such as Dynamic Planner, to determine the best portfolio for a client at a given stage of life. And he is sceptical about outsourcing the investment management to discretionary portfolio managers, having had a poor experience with Quilters. ‘Some of these firms are decidedly mediocre. They’re just closet FTSE trackers,’ he says. ‘They’re hopeless.’
The rest is history
Cowburn becomes animated over the subject of investments. ‘It’s almost like an obsession,’ he says. ‘We like to win. I get a big kick out of being able to say to a client: "You put three grand into this Pep in 1992, it’s now worth £21,500".’
A large part of his job, he believes, is less about advice and more about education. When he was a child he wanted to grow up to be history teacher and, although he missed out on the necessary grades to attend university, a part of that passion remains. ‘It’s occurred to me that I’ve been a financial history teacher,’ he says.
One of his favourite teaching aids is a graph showing the miracle of compound interest as applied to different asset classes; a graph that he believes puts recent market activity into perspective. ‘You have to look back through long periods of history to make any sense of where the current mess is going. We’ve been in a catastrophic mess before. This isn’t the end of the financial world,’ he says. Part of the value of the graph is in showing clients that although portfolios dominated by equities may fall harder, they also recover quicker, he points out.
‘We’re in the communication business. We explain to people how certain things work, and how they can achieve their goals. Communication and education: it’s what we do.’
And it is not just clients that Cowburn educates. He is an enthusiastic advocate of salary sacrifice schemes and often talks to the finance directors of the companies his clients work for. ‘Anybody who’s earning above the National Insurance threshold and wants to make a personal contribution, salary sacrifice has got to be the answer. There are always winners and losers, but in this case the loser is the Treasury.’
Of his clients who are still working, almost all have now been moved to a salary sacrifice scheme.
Survival instinct
With a clear business development plan and a steadily increasing base of recurring income, Cowburn is relaxed about the future. But the journey to this point has been a long, hard slog, he says. ‘We’ve been against the odds for years but we’ve survived. I think that’s a feature of IFAs – we are survivors.
‘At one stage Lyn and I used to have to pay ourselves with credit cards because the revenue just wasn’t there but the overheads were,’ he recalls. ‘Going back into the 1990s, I used to work from nine until nine.’
The hard graft, ultimately, has paid off, he says. ‘I’ve put a lot of time, effort and investment into the business and into people. Where we are now, we’re just about sorted.’ But, as though to prove the adage that behind every successful man is a good woman, he emphasises that it was a team effort. ‘I couldn’t have done it without the strength and constant support of my wife. Lyn takes full control of the financial stability of the business. It’s a family business,’ he says.
While Cowburn has yet to decide the exact nature of his exit route, there are two goals in particular of which he is sure. The first is to upgrade to a Jaguar XJ and the second is to get some use out of it: ‘I’ve decided that my ideal retirement is touring the inns and restaurants of the United Kingdom,’ he says. ‘I like this place. I think it’s a beautiful country.’
Five top tips
1: There are billions of pounds invested in vanilla sludge managed pension funds going nowhere – just take a look at the high street banks’ managed funds. IFAs need to reinvest these funds into the hands of proven, talented fund managers to radically improve performance and clients’ retirement prospects.
2: Focus on investment performance and not charges when selecting funds. Identify talented fund managers and back their abilities.
3: Try to maintain regular contact with clients. Aim to be as available to clients as possible.
4: Build a strong team of adviser back up to enable the advisers to concentrate on what they are there for: advising. Train staff on the practical realities of successful financial planning.
5: Clients basically have four accounts: deposit, investment, mortgage and retirement. The objective is to strike the most appropriate balance between
all four.