With a dozen offices dotted around western Europe and a flourishing profit ownership scheme under its belt, Spectrum IFA Group certainly shows no signs of slowing down as it enters its 12th year.
The firm’s founders might continually roam between six countries but the UK seems to be at the heart of the business, with the vast majority of Spectrum’s advisers and clients born and bred in the British Isles.
Speaking to International Adviser from France, one of the firm’s three founders, Michael Lodhi, mentions he is holding out for Scotsman Andy Murray to perform well this summer, particularly as the warm weather is said to be the prime climate for the tennis player.
Climate, however, seems to be no obstacle for Spectrum, which survived the global financial crisis while maintaining a solid number of IFAs.
The 45 advisers may be peppered around the continent, working with clients based in France, Spain, Luxembourg, the Netherlands, Portugal and Switzerland, yet Lodhi maintains this is a close-knit army of financial planners.
“There is a certain atmosphere and a strong bond between the advisers within Spectrum and that is very clear. Obviously, that is a good thing but what is more important is that we do our jobs properly,” he says.
“We are very careful how we guide clients with their investments and financial planning. If we do that correctly and properly then our clients will do well and be able to sleep at night – as will our advisers.”
The core members of the company – including founders Anne Ollerenshaw, Michael Lodhi and the now semi-retired David Holmes – have known each other for more than a decade, but no doubt Spectrum’s profit share system also plays a key role in its collaborative vibe, particularly as in the past four years the firm has built up enough reserves to ensure its advisers all get a piece of the pie.
Compliant products
By insisting IFAs use daily-traded EU-compliant UCITS funds from large brands, the firm also avoids some of the issues, such as suspended funds, which brokers can frequently be faced with.
But Spectrum is not only strict with the underlying investments advisers use within tax wrappers. “Our criteria for selecting advisers is quite tough, and that is why we have grown nice and steadily,” says Lodhi.
What is notable is that most of Spectrum’s advisers are in the same boat as their clients, living and working as expatriates.
“We seem to have built the business partly on the virtue of the fact that our advisers are expats who are living locally in these areas themselves,” he says, before emphasising that financial advice is still very much about the relationship between an adviser and their client.
“Though behind the scenes the IT side can be very valuable and helpful, people buy people, and I think the personal service and face-to-face meetings with an adviser remain very important in our market.
“If we hear criticisms of other financial institutions, it is usually because the client has gone into the bank to ask for advice and they want it to be like the old days.
“The banks obviously do not do that anymore but the financial advisory business is still there to provide that kind of hand-holding and personal level of service.”
Client contact
“I believe that makes good business sense for the adviser because the closer you are to the client, the more likely you are to do business with them,” says Lodhi.
Local banks are the firm’s biggest competitor but far from being daunted by rival businesses, Lodhi acknowledges that competition is healthy, and in fact the multi-currency tax wrappers the company offers are more suited to the niche expat market Spectrum serves.
Despite the abundance of regulatory changes around the world forcing firms to restructure their remuneration models, Europe has not yet implemented any new RDR-style changes. Meanwhile, Lodhi has no reservations about his advisers using a commission-based model to receive payment.
“It is not better or worse for the clients either way,” he says, comparing a commission-based structure with those firms that receive payment through fees.
“I have looked at some UK IFAs and worked out what the bottom-line cost for the clients is going to be over a five to 10-year period, and there is nothing much in it. It is just another way of getting paid.
“Clients look at the bottom-line cost and also at the level of service they are going to get. That is certainly important to them, and we make sure we are transparent with how much everything costs when we sit down with clients.”
Though the firm’s founders have not yet been tempted to take the plunge and move towards a fee-based payment model,that is not to say Lodhi and Ollerenshaw are not keeping an eye on the ball and their minds open to change.
