What does the future hold for the financial advice industry?

Financial Services | Interview
Stephen Kavanagh

Business Leader recently sat down with Stephen Kavanagh, the Chief Executive of independent financial advisory firm, Chase de Vere, about the future of the industry, why being independent is important, and what makes a successful leader. 

Can you tell readers about your professional background?

I began my career in 1985 as a Private Client Portfolio Manager with Bank of Scotland before becoming an independent financial adviser with Allied Irish Bank in 1992.

I joined Chase de Vere as an adviser in 1997, it was called Thomson’s Financial Planning back then, and I became the Company’s top performing adviser. I was then promoted to be Regional Sales Director for the North and then National Sales Director.

By 2010 we had been acquired by Swiss Life, who are a brilliant parent company. I was asked by Nils Frowein, the Chief Executive Officer of Swiss Life International and the Chairman of Chase de Vere, to become Chief Executive of Chase de Vere. I’m delighted that I took the opportunity because the company hasn’t looked back since then.

Chase de Vere is now the largest firm of ‘pure’ independent financial advisers in the UK with 16 offices, 200 advisers and we advise on around £10 billion of client assets. We’ve also become more profitable and, though I cannot announce figures yet, 2018 was a spectacular year for our business.

I sit on the Executive Committee of Swiss Life International. This committee is responsible for Swiss Life International’s activities throughout Europe and I have a particularly important role in assisting Swiss Life’s European advisory businesses with the development of their propositions as they aim to move from charging commissions to fees in line with the UK financial advice market.

What is your vision for the company?

I want Chase de Vere to be recognised as the leading firm of independent financial and corporate advisers in the UK.

We are making great progress to achieve this in terms of growing our revenue and profitability and investing heavily in our infrastructure and client proposition. I never forget that it is our clients who pay 100 per cent of the fees we generate and so I need to ensure that we are focused on providing them with the best possible level of service and add value to their financial decisions.

I want Chase de Vere to be successful but I want to make sure we do this in the right way. This means taking care of our clients, as evidenced by our commitment to independence, but also taking care of our employees, allowing them to benefit from our success and to fulfil their career ambitions at Chase de Vere.

It seems that independence is important to what you do

Independence is the core part of what we do and I am fully committed to independence and to providing top quality independent financial advice for our clients.

This is in contrast to the industry as a whole. Most of the larger financial advice firms, the firms which people might know such as St James’s Place, Hargreaves Lansdown and Tilney, give restricted financial advice rather than independent financial advice.

I won’t allow Chase de Vere’s advice to be comprised and so we don’t have our own financial products or funds. When we give advice to clients, if a product or investment fund is recommended, we can select what we believe is the most suitable one on the market.

I have spoken with our advisers, and they want us to remain independent. I have spoken with our other employees and they want us to remain independent. I have spoken with our clients and they want us to remain independent as well.

Being independent also helps to us build external relationships. We’ve worked alongside the British Medical Association, giving advice to their members since 2005, we work with many firms of lawyers and accountants and we work with many employers, providing advice to their senior managers and employees and, almost without exception, a key reason they want to work with us is because we are independent and so we will only give advice which is in their best interests.

You mention that you work with employers, is this an important part of your business?

Yes, our corporate advice proposition is an important and growing part of our business. Amongst the services we offer, we give advice to employers on their employee benefit packages and workplace pensions and we also provide financial advice in the workplace to their employees.

We have a big advantage over many other firms in that we have experienced and qualified private client advisers and experienced and qualified corporate advisers and they often work hand-in-hand. This means we can give expert advice to companies, their employees and their senior executives.

In your opinion, what makes a successful leader?

It’s all well and good having a vision, but you need to bring your employees on the journey with you. Sometimes being a leader involves making difficult or unpleasant decisions, but it’s really important to be open with people, to communicate effectively and make sure everybody is engaged and feels valued.

We have many fantastic employees at Chase de Vere and I would much rather they were working for us than elsewhere. We ask them regularly what they think about working for Chase de Vere and we try to understand what we could be doing better.

In terms of engaging employees I regularly visit our offices around the UK and make sure that I spend time speaking with people to understand how they are feeling. I provide monthly updates which provide details of our business performance but also gives me the opportunity to recognise employees who are doing an outstanding job, have been promoted or passed professional qualifications. I personally call our employees who have performed especially well or who reach a milestone work anniversary to thank them for their efforts and their commitment.

I produce quarterly videos which are shown in all our offices and these highlight our strategy and how we are performing to date. The feedback from these has been excellent and we then provide drinks and nibbles for employees, so they can discuss the video afterwards and importantly spend some time interacting with each other in a more social environment.

Each year we hold conferences for our advisers and for all of our back office employees. These take place back-to-back and have recently been held in Manchester. The adviser conference took place on the Thursday, where me, our Chairman Nils Frowein and other internal and external experts gave updates. This year our key external speaker was Simon Weston, who was truly inspirational. The conference is then followed by a black tie gala dinner and everybody stays over in the hotel.

The following day is the admin conference, where we invite all of our back office employees to a similar event with presentations and a gala black tie dinner. As our back office employees would be travelling home on a Saturday, which eats into their weekend, I gave them all the following Monday off work.

How is the financial advice industry changing?

The defining moment of the last decade was the introduction of the Retail Distribution Review at the beginning of 2013. This resulted in advice charges moving from commission to fees, far greater transparency for clients and advisers having to achieve more stringent qualification levels before they could be authorised. We agreed with all of this and so we went early and started to incorporate these changes into our business in advance.

While the Retail Distribution Review has been beneficial for most clients, there have been some unintended consequences. We have seen an increasing advice gap, where many people can no longer afford to pay for good quality professional financial advice. This is where I believe forward-thinking employers can have an important role to play in helping their employees.

We’ve also seen many of the larger financial advice firms adopting a vertically integrated model, where they give advice but often recommend their own products. Many smaller adviser firms are struggling to cope with the regulatory burden in our industry and most are run by people who are approaching retirement and so we’re seeing the large restricted consolidator firms buying greater numbers of small firms, as a result more of the industry is moving from giving independent to restricted financial advice. It’s difficult to see how this trend can be reversed. This is positive for us as the independent financial advice we give becomes harder to obtain elsewhere, but I’m not at all convinced that this is beneficial for the industry or for its clients.

And what of the future?

I want our business to keep growing. This past year was a great success story but I’m already looking ahead at what’s next.

I’m planning to make more acquisitions in 2019. We acquired Medical Money Management in 2017 and that has been a stunning success and I’m looking to integrate more firms with a similar client-focused ethos into our company.

I want our employees to feel they can develop their careers at Chase de Vere. Many financial advisers in the industry are well into their 60s. We’re different, our average adviser age is less than 50 and we’re continually focused on progressing or recruiting our next generation of advisers. Very often people join us in administration roles, they get experienced they pass their examinations and progress to become advisers. Many of our top fee-earning advisers of today originally joined us as administrators or trainee advisers. This is very rewarding for me and puts our company in a great position for the future.

I also want to keep flying the flag for independent financial advice. I am absolutely committed to this. To my mind this is the gold standard for financial advice and if we have aspirations to provide the best possible service for our private and corporate clients, why would we offer something different?

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