Fitzroy Wealth Management

A Message from Lord Pickles and Lord Blunkett, followed by Fitzroy Wealth Management's best practice article

The ability to listen and learn from one another has always been vital in parliament, in business and in most aspects of daily life. But at this particular moment in time, as national and global events continue to reiterate, it is uncommonly crucial that we forge new channels of communication and reinforce existing ones. The following article from Fitzroy Wealth Management is an attempt to do just that. We would welcome your thoughts on this or any other Parliamentary Review article.

Blunkett signature Rt Hon The Lord David Blunkett, MP
Pickles signature Rt Hon The Lord Eric Pickles, MP

www.fitzroywm.co.uk

THE PARLIAMENTARY REVIEW
Highlighting best practice
22 | FITZROY WEALTH MANAGEMENT
The management and
staff of Fitzroy Wealth
Management outside their
Glasgow Head Office
Fitzroy Wealth Management (FWM) is a wealth management
firm headquartered in Glasgow, with additional advice centres in
Edinburgh and London. We concentrate on the “at retirement
market” where our expertise is invaluable to our clients looking to
replace their employed income with pension and investment income.
We have built up funds under management of £175 million and have
influence over a further £100 million. To describe the company’s trials,
triumphs and tribulations is its owner and director, Alan Wardrop.
How many IFA businesses have a board of directors sharing a passion for football and
finance, as well as one who, as an 11-year-old, kicked a ball about with the great
Sir Alex Ferguson? That would be me and my business partner and fellow director
LesGray, who formed Fitzroy Wealth Management after successfully building up
and selling our previous business Johnston, Gray & Wardrop Ltd (JGW). We are both
Scottish Premier League football club directors with Les at Hamilton Academical and
I am on the board at my local club St Mirren FC. St Mirren have the proud honour of
being the recipient of Sir Alex Ferguson’s first managerial trophy and the unenviable
history that we are the only club to sack Sir Alex Ferguson (but please note that was
before my time).
JGW was our original IFA practice, which concentrated on the UK protection market.
We sold the business to our joint venture partner to concentrate our resources in the
pensions and investment market where my G60 pension qualifications could help the
business grow. Our investment in IT to generate new client enquiries has proven very
successful and the additional referrals from these new clients has had a compound
effect on our growth.
We pride ourselves on the very close working relationship we have with our clients as
we engage with them regularly, building up a good knowledge of their circumstances
and financial objectives and working hard to achieve them. We know we are getting
older as we now act for clients’ children and grandchildren.
Business challenges
There are many challenges to our business, as the burden of administration and
compliance has been passed by the product providers and regulators to the IFA.
Our staff numbers have increased dramatically due to the changes in compliance
and online submissions. The FCA continue to recommend changes to the advice
process, which – although for the greater good – causes further investment in staff
and technology. The product providers have cut back on staff, replacing them with
technology. The administration of that change, however, has been passed to the IFA
with quotes, fund switches and new online business submissions being produced – all
implemented by IFA staff, whereas it was previously the product provider’s role.
The changes in January 2013 (banning commission on investment and pensions) was
initially seen as a threat to our business, but in actual fact it has turned out to be the
best thing to happen to both our clients and our business.
FACTS ABOUT
FITZROY WEALTH
MANAGEMENT
»Directors: Alan Wardrop,
LesGray and DanielBoyle
»Established in 2011
»Offices in Glasgow, Edinburgh
and London
»Services: Independent financial
advice, focused on investment
and pensions
»No. of employees: 13
»Funds under management:
£175 million
Fitzroy Wealth
Management
23FITZROY WEALTH MANAGEMENT |
BEST PRACTICE REPRESENTATIVE 2018
Our initial fear was that people
wouldn’t pay for financial advice which
was, and is, a real concern, as even
today only 24 per cent of the adult
population are willing to pay for it.
However, the many clients who are
willing to pay for ongoing advice have
created a real underlying value in our
business, with annual recurring fees for
our service proposition now representing
50 per cent of our annual turnover.
The benefit is two-fold, with a
huge benefit to clients as they
no longer receive a one-off initial
recommendation, which is never
monitored or amended in line with
performance, legislation or change of
fund managers. Clients’ circumstances
also change, and regular reviews as part
of our service proposition ensure clients
are kept up to date with regular advice
in a hugely changing financial market.
For example, pension clients in capped
drawdown (a ceiling on pension fund
withdrawals) who haven’t maintained
their IFA post 2013 may be unaware of
these changes. Furthermore, although
higher income is available, they could
be missing out as they may not know
of the new flexi-access rules, whereby
there is no upper limit and more income
is available.
The challenge is to maintain that close
relationship when time is limited and
client numbers grow. We have recently
added telephone reviews rather than
face-to-face reviews for those clients
who are not based close to our regional
centres, or those who have a lower
amount of funds under management.
The additional challenge is to make sure
we continue to provide reviews in line
with our service proposition as the client
bank grows.
Client challenges
One of the areas with which I
believe the government is missing an
opportunity is the maximum pension
contribution rules. It makes no sense to
limit the amount of funds an individual
can build up by restricting their level of
contribution to the current maximum
per annum of £40,000. Yes, carry-
forward rules offer an opportunity to
catch up on previous years to maximise
allowances, but it really isn’t enough
with a maximum of £120,000.
Why limit the potential size of the fund
when, at retirement, a fund in excess of
the lifetime allowance of £1.03 million
attracts further taxation at a hefty 55 per
cent? It should be noted that the level
of tax revenue received from pensions
in excess of the lifetime allowance
has trebled in the last few years from
£40million in tax year 2014/2015 to
£110 million in tax year 2016/2017.
I understand the level of tax relief
on contributions is a potential issue,
but, having embarked on an auto-
enrolment campaign to encourage all
employees to save for their retirement,
a consistent policy to encourage saving
for retirement should prevail.
Moreover, when benefits are taken,
75 per cent of the pension fund built
up is potentially liable to income tax at
the individual’s highest marginal rate,
so why not allow a bigger fund to be
created which can provide further tax
revenue?
Our clients are not the FTSE 100
company directors who in the past
paid their “golden goodbyes” into a
pension fund to avoid tax. Our clients
are hard-working individuals who have
repaid their mortgages and are looking
to catch up on previous years where they
didn’t have the spare capital or income
to invest in pensions and are now
limited by the maximum pensionrules.
We also have directors of small local
companies who didn’t have the funds
available for pensions in the early
years of their business but now, with a
mature and successful business, could
make significant contributions. This
is an area I believe the government
and HMRC have to reconsider for the
benefit of every interested party.
Joint owners and
directors Les Gray and
Alan Wardrop
Clients’
circumstances
also change, and
regular reviews
as part of our
service
proposition
ensure clients
are kept up to
date with regular
advice in a
hugely changing
financial market

www.fitzroywm.co.uk

This article was sponsored by Fitzroy Wealth Management. The Parliamentary Review is wholly funded by the representatives who write for it. The publication in which this article originally appeared contained the following foreword from The Rt Hon Theresa May MP.

The Rt Hon Theresa May MP's Foreword For The Parliamentary Review

By The Rt Hon Theresa May MP

This foreword from the then Prime Minister appeared in the 2018/19 Parliamentary Review.

British politics provides ample material for analysis in the pages of The Parliamentary Review. For Her Majesty’s Government, our task in the year ahead is clear: to achieve the best Brexit deal for Britain and to carry on our work to build a more prosperous and united country – one that truly works for everyone. 

The right Brexit deal will not be sufficient on its own to secure a more prosperous future for Britain. We also need to ensure that our economy is ready for what tomorrow will bring. Our Modern Industrial Strategy is our plan to do that. It means Government stepping up to secure the foundations of our productivity: providing an education system that delivers the skills our economy needs, improving school standards and transforming technical education; delivering infrastructure for growth; ensuring people have the homes they need in the places they want to live. It is all about taking action for the long-term that will pay dividends in the future.

But it also goes beyond that. Government, the private sector and academia working together as strategic partners achieve far more than we could separately. That is why we have set an ambitious goal of lifting UK public and private research and development investment to 2.4 per cent of GDP by 2027. It is why we are developing four Grand Challenges, the big drivers of social and economic change in the world today: harnessing artificial intelligence and the data revolution; leading in changes to the future of mobility; meeting the challenges of our ageing society; and driving ahead the revolution in clean growth. By focusing our efforts on making the most of these areas of enormous potential, we can develop new exports, grow new industries and create more good jobs in every part of our country.

Years of hard work and sacrifice from the British people have got our deficit down by over three quarters. We are building on this success by taking a balanced approach to public spending. We are continuing to deal with our debts, so that our economy can remain strong and we can protect people’s jobs, and at the same time we are investing in vital public services, like our NHS. We have set out plans to increase NHS funding annually by an average by 3.4 percent in real terms: that is £394 million a week more. In return, the NHS will produce a ten-year plan, led by doctors and nurses, to eliminate waste and improve patient care.

I believe that Britain can look to the future with confidence. We are leaving the EU and setting a new course for prosperity as a global trading nation. We have a Modern Industrial Strategy that is strengthening the foundations of our economy and helping us to seize the opportunities of the future. We are investing in the public services we all rely on and helping them to grow and improve. Building on our country’s great strengths – our world-class universities and researchers, our excellent services sector, our cutting edge manufacturers, our vibrant creative industries, our dedicated public servants – we can look towards a new decade that is ripe with possibility. The government I lead is doing all it can to make that brighter future a reality for everyone in our country. 

British politics provides ample material for analysis in the pages of The Parliamentary Review 
The Rt Hon Theresa May MP
Prime Minister