In the meantime, he is happy to be ahead of the curve, believing that the group stands out as a beacon of quality in a market too often lacking in transparency.
Scottsdale Overseas was founded in 2011. Wallis-Powell’s fellow directors run the UK side of the business, Scottsdale Consulting, from Milton Keynes, which is Financial Services Authority-regulated through the Intrinsic advisory network.
Natural expansion
When the group decided to expand overseas, Spain was a relatively straightforward choice: Wallis-Powell was already based in Spain with a large and stable client base. There was a large expatriate population, so the country was ripe for any business expansion. Equally, the Financial Services Commission in Gibraltar provided a credible and English-speaking regulator.
There was also an opportunity presented by the relative paucity of quality advice in Spain. Wallis-Powell says that Spanish expats were often badly served by advisers. Many were being recommended poor value, commission-heavy products and he believed that there was a gap for better quality, transparent advice. He says: “The vast majority of advisers in the market worked on commissions. We concentrated on providing a level of quality, replicating the type of business we had in the UK.”
Upfront and open
The group worked either on a fee basis or through fully disclosed commissions. Wallis-Powell says: “We found that we had a good proposition. Our only problem initially was that it was difficult to recruit. A lot of advisers didn’t like the idea of disclosing commissions.”
Initially, they looked to the UK market to recruit, but subsequently recruited in the Spanish market where advisers are suitably qualified.
Broad base
The group is now five strong. Each adviser brought their own clients and covers a different part of Spain, but they all support the group’s values, says Wallis-Powell. For his part, Wallis-Powell covers the Costa Blanca and Costa Calida, but between them they have the country well-covered along with Portugal and the Balearics.
In building the group’s client base, Wallis-Powell says that each adviser was already embedded in the community and therefore had a rich seam of referrals. However, they also worked with some introducers, such as lawyers and accountants. For example, they have built a strong working relationship with accountancy group Asesoría Torres. One of the group’s advisers, Mike Bear – before he retired – worked with head Antonio Torres for a number of years and the relationship has proved mutually beneficial. The relationship has been continued by another of the group’s advisers, Brian White.
The group also rolled out a seminar programme in 2013, which has brought in new clients. It has also paid attention to areas such as its website, for which it brought in external designers, recognising that it is the public face of the company.
All bases covered
The group has embraced a modern approach to financial planning, whereby the advisers operate as financial advisers rather than investment managers. This has meant embracing an outsourced investment proposition, now common in the UK, but still relatively rare among the group’s peers. Wallis-Powell says: “We recognise that we do not have the skills to be investment managers – it is not our area of expertise. We have a range of managed portfolios, which are looked after by Quilter in the UK. Quilter has a mandate to develop the portfolios in line with certain risk parameters. The portfolios need to fit our clients risk profiles.”
The range is labelled the ‘Verdant’ portfolios. The group currently has defensive, conservative and balanced portfolios. Wallis-Powell says that the service differs significantly from those provided by many competitors, because it does not ‘unitise’ investors within a single large portfolio and allocate units. Instead, clients will have their own strategy of collective investments, making it easier to see the exposure to each fund.
The funds invest in collective investments across equities, absolute return funds, bonds, commercial property and commodities. These may be active or passive funds – the group is agnostic – depending on whether the investment managers believe that an active manager can add value, or whether passive is appropriate to keep costs lower. The portfolios are all Spanish-compliant for tax purposes and traded daily to ensure liquidity. It is relatively easy to switch between strategies if a clients’ needs change and the strategies can be mapped to a client’s risk profile.
Wallis-Powell believes this ensures that client needs are met and that they do not have to worry about the day-to-day management and rebalancing of a portfolio.
The group chose Quilter based on its expat experience: “We had worked with them in the UK for 20 years and felt the group understood our market very well. We also liked the fact that they were a little more cautious than some of their peer group. Each of the funds is risk-adjusted. The outcomes are flagged in advance and volatility is managed. Quilter manages each portfolio to a certain risk profile, which ensures that it is appropriate.”
Cost-effective
He also believes that Quilter offers good value for money. The portfolios are managed at 0.4% + VAT per year. Praemium do the dealing for the group, which helps keep costs low as well. The group makes online valuations available through its website and investors can see how their fund has performed against its benchmark.
These portfolios will often be structured through an Offshore Portfolio Account, a unit-linked whole of life insurance policy that can be used to bring client investment together in one place. Wallis-Powell believes that this is often overlooked with clients’ investment portfolios not being properly matched to the tax-efficient wrapper.
Tech systems
The group is regulated through the Nexus Global network. The network also provides much of the group’s technology set-up: “Of the two systems, one has come through Nexus. There is the Broker Back-Office system, which holds client details and does commission reconciliation.
For our own peace of mind, we also use Safesync. This is our own, cloud-based system that we use to maintain client records. It also means that we can download all the client records to our laptop or PC at the touch of a button,” says Wallis-Powell. The group also has an in-house pension transfer analysis system, which is through SelectaPension.
He adds that most of the group’s client base is retiring expats so there is a lot of pension work, particularly QROPS and QNUPS. That said, they do not have a ‘client type’ as such. They do some corporate and small businesses work, including putting workplace pension schemes in place. The group also do some mortgage protection and family protection work. The latter is largely life insurance provision, but there is also plenty of expat inheritance tax planning work.
The group largely has the skills and qualifications in-house to cover the majority of client needs. However, Wallis-Powell still has ambitions. He is studying for his chartered financial planner qualification, aiming to expand on his historic specialisms of inheritance tax mitigation and investment.
The group happily takes all-comers, imposing no minimum wealth level on potential clients. He says: “We don’t pick our clients – they choose us. We’ll deal with anyone who is happy to pay the fee, rather than imposing minimum holding levels or limiting to high net worth clients. Everyone gets the same care and attention.”
Personal touch
Wallis-Powell is keen for all advice to be face-to-face. “The relationship is most important. Face-to-face planning is where we concentrate our efforts. We are unlikely to be launching telephone services or anything like that.”
The group is considering opening other offices in Europe, notably in France, targeting areas where a wealth of expats need quality advice. If it does, the formula will be the same – “personal relationships are where we specialise” says Wallis-Powell.
Scottsdale’s message of transparent, ethical advice has found resonance with the Spanish and Portuguese expat markets. If the eurozone regulators decide to adopt UK-style regulation of financial advice within the Spanish market, the group will be well-prepared. But in the meantime, its clients understand the value they receive as a result.
