Adviser profile: Andrew Reeves has high hopes down on the farm

Andrew Reeves has made The Investment Coach a success in the rural setting of his family farm and he is now casting for the mass market and employee benefits business.

In 2006 Reeves returned to the farm where he grew up and which has been run by his family for two generations. But instead of taking over the farm business, his aim was to set up something completely different, an ambitious financial planning firm called The Investment Coach.

He remains a shareholder on the 2,000-acre arable farm, but only devotes about 5% of his time to it. ‘It’s fantastic. The Investment Coach has enabled me to come back here and not farm! That was never an option for me,’ says Reeves. ‘We have a farm manager and, after we’ve discussed finance and tactics, he gets on with it and the rest of my time is spent on financial planning.’

Very much away from it all in the village of Podington, Northamptonshire, The Investment Coach is located in smart premises next to the extended farm house which is now Reeves’ family home. There’s a gentrified air to the meeting. ‘We try to bespoke things for clients, for example, recording what they drink so we know what they like,’ says Reeves, offering myself and Tom the photographer a glass of champagne.

Sharing in the cloud

The Investment Coach has become a successful financial planning business with 200 clients. Reeves is also developing other parts of the business based around mass-market, web-based financial advice and niches such as flexible benefits planning.

‘The "coach" bit is important,’ he explains. ‘I wanted to collaborate with clients who had an interest in their own finances. It’s about empowering them to make decisions. All the technology we have behind it is about sharing information. If people are interested to see our 26-step advice process, we can open that up to them.’

This sharing is done via a computer cloud-based system called Dropbox. Dropbox is a simple online file sharing program which is free to clients, though Reeves has to pay for his additional data capacity and a service called Dropbox Team. The latter provides a central place where professional partners such as solicitors, accountants and investment managers can see the information, but with permissions controlled by Reeves. ‘It’s a one-stop shop involving all the professionals they need, with everyone working from one set of data,’ he says.

Kitemark pioneer

Reeves was the first adviser in the UK to obtain the ISO 22222 standard that promotes business operations and treating customers fairly. The standard gave him a comprehensive and rigorous process for improving and operating the business. It also, for him, became the forerunner to the Dropbox system.

‘I really engaged with the standard because I could see it was honing our 26-step process for providing compliant business,’ says Reeves. ‘Now we have the process, we have lots of useful information for the client to see, such as research, showing what’s best for them. It’s our back office but it became a way to share and collaborate. Clients love it.

‘Everything is instantly backed up in the cloud. It’s more secure than email. The battle for email has been lost, we get 500/600 emails in the office a day and it’s hard to see the wood for the trees. With Dropbox you get a little bubble that says a new document is in, so the client gets an idea of the flow of work behind the scenes for them and if they want to see the document, they can just click on it.

‘The only hesitation I get is from clients concerned about security, but the data is encrypted and in different channels, held in different places. Everything has a risk but I see this as a safer mechanism than having everything in an unencrypted work machine or a filing cabinet.

‘The underlying server is based in the States but there is a data security agreement between America and Europe.’

* forecast figures except client numbers which are current

Virtual team

Office manager, Cris Downing (pictured with Reeves, left) is the only other staff member in the office. ‘As well as the external partners we have an inner virtual team of Paradigm [an IFA support services firm] for compliance; my locum, Nigel McTear; Gareth Thompson of web designer Code Potato; and discretionary managers Evercore Pan Asset Capital Management,’ says Reeves.

When The Investment Coach started, Reeves brought some clients from his previous employers Zurich and Openwork, who he worked for in London. Initially he would travel to see clients but then arranged for them all to come to the office. ‘We offer a pick-up service from Wellingborough station,’ says Reeves. Clients are usually either retired or younger but with high income. ‘Retired people in particular are happy to travel and I think they get some comfort from seeing where you are set up – particularly as we trade on the countryside lifestyle, taking time out to discuss the important issues.’

The planning process involves lifetime cashflow forecasting and some life planning if required. The collaborative approach saves a lot of time, says Reeves, as clients are expected to input a lot of their own data before the first meeting, providing they are comfortable with the technology. Reeves does everything he can to share the workload with the client and get them involved with the process. ‘If they are typing in a fact-find ahead of the first meeting, it makes it more productive when it comes to explaining charges or benefits,’ he says.

The Investment Coach charges 1% for initial advice, another 1% for implementation and 0.75% a year for ongoing reviews and investment management.

‘Higher upfront charges are a reflection that we are a new business and need to provide cashflow,’ says Reeves, ‘What tends to happen is that they pay the advice fee on invoice and the implementation fee comes from the cash element of the wrap account, so although you can’t get away from the fact that it is 2%, it’s not all from the same pot. Another benefit of The Investment Coach is that clients can take the advice and implement it elsewhere, so as a business we need to make sure we are not offering free advice. I did some market research on what others charge, and that was middle of the pack.’

Mass market advice

When The Investment Coach was set up, Reeves also bought the rights to 12 other domain names representing future niches to explore. These include EB Coach (which stands for Employee Benefits coach), and The Financial Coach. Reeves has started building content for these two websites (set up as micro-sites to the main one) with a view to launch in the near future.

The Financial Coach will be the mainstay of his new mass market strategy. ‘The idea is to have a brand, and lots of information out there that people can see before they come to us, so they know what the process is,’ says Reeves. ‘Rather than thinking "RDR is coming, we have to go high net worth", we are going the other way, with marketing to help the mass market understand what we do. We want to move more from selling to marketing, it’s about who initiates contact. We want people to go online and see detailed information about how to manage their finances. The website will collect data about them and signpost whether it’s something they can do themselves, or whether they should seek advice.’

The Financial Coach should therefore become a referral mechanism for the full, regulated planning available through The Investment Coach. In time, Reeves envisages three strands of advice: free content on the website; simplified advice available for a £25 monthly retainer via The Financial Coach; and fully regulated financial planning via The Investment Coach.

Employee benefits and auto-enrolment

At the same time he is also developing EB Coach, through a link with Paradigm Pensions which has just launched a flexible benefits package in collaboration with Steve Bee and Staffcare software.

‘We are getting into flexible benefits for medium-sized companies with a view to being ready for auto- enrolment in 2012,’ says Reeves. ‘There’s a market for a flexible benefits system that deals with all the complexities of auto-enrolment. We will approach it through HR and the website will help attract that kind of market as well as accountants and solicitors.’

Paradigm’s scheme launched on 5 November. ‘We are one of the first into the pilot,’ says Reeves. ‘It will be considerably less expensive for employers than buying off-the-shelf and supported by regulated advice if they need it. Auto-enrolment is a fantastic opportunity to get into this niche.’

The Investment Coach has shown a respectable level of growth just through referrals. But Reeves wants to move faster. ‘If we continue as we are, it will just be incremental. The real growth engine is through the mass market appeal of The Financial Coach and auto-enrolment business,’ he says.

‘EB Coach is ready to launch in spring 2011. Our first presentation is lined up for May, we plan to invite accountants and solicitors. I have targets in mind for what we might achieve with that but it’s too early to divulge them! However, in general I would like to take £150,000 profit from the business, so turnover has to go up quite a bit to meet that target given that I’m keen to leave money in for development.’

With all this going on, staffing could become an issue. Reeves would like to take on a marketing/IT manager, either as part of the virtual team or in-house. He is also keen to take on a graduate adviser.

Investment proposition

Recruitment issues aside, Reeves says: ‘I am much more excited about the industry this year than I was this time last year where I was still finding the structure – I still am but I feel I have broken the back of it.

‘I knew what I was looking for in terms of the investment proposition and it was a huge relief when I found it [with Evercore]. Where I can add value for clients is in passive investment with tactical asset allocation. Research shows that asset allocation accounts for 90% of returns.

‘With absolute return funds – another popular strategy – they go long or short but the manager can get it wrong in both directions. With a passive/tactical strategy it’s long or cash, they don’t try to short the market. So, if they get it wrong, at least you’re preserving capital and earning a bit of interest.’

The other thing that’s exciting him at the moment is social media. ‘I really got into that, predominantly on Twitter, it gives you a feeling for what everyone is up to. Here it can be a bit quiet, so that stream of activity keeps you motivated. I found my web designer, Gareth Thompson, on Twitter. It also means, for example, I feel more involved with the IFP Financial Planning Week, because of the flow of information on Twitter. And I’m a lot more involved with journalists.’

Reeling them in

Outside work Reeves enjoys outdoor pursuits such as running and fishing. He and his family spend a lot of time in the far north of North East Scotland, where he owns a sporting estate jointly with his sisters and father. ‘It’s wonderful scenery,’ says Reeves.

The conversation turns to fly fishing and Reeves proudly tells of the time he caught a 21-pound trout which was on the line for 40 minutes.

Does he think it will be even harder to reel in those big corporate clients he’s after?

‘Referred individuals are easy but, particularly with no brand to begin with, larger corporate clients will be harder to attract. So I’m looking forward to the challenge!’ he says.

Five top tips

• Have a niche. Work effectively, then develop another niche.
• Put clients and employees equal first.
• Allocate time to marketing specific to your niche. (After RDR, content is king.)
• Embrace client/third party collaboration, cloud computing and social media.
• Have a business process but consider it fluid and available for constant improvement.

CV: Andrew Reeves

CAREER

• 1996-2001 Scottish Provident, account manager
• 2001-2003 Independent Financial Strategies, independent financial adviser
• 2003-2005 Zurich Advice Network, broker consultant
• 2005-2006 Openwork, financial planning service (central)
• 2006-present The Investment Coach, director

PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS

• BSc (Hons)
• Associate of the Institute of Financial Planning
• Fellow of the Personal Finance Society
• Certified financial planner
• Chartered financial planner
• MIoD
• ISO22222
• CII
• FP1, 2, 3
• CF8, 9
• MAQ
• G10, 20, 30, 60, 70, 80
• H15, 25
• K10, 20
• SV1