Principal & Prosper

A Message from Lord Pickles and Lord Blunkett, followed by Principal & Prosper'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 Principal & Prosper 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
Pickles signature Rt Hon The Lord Eric Pickles

Highlighting best practice
Managing Director
Committed to providing an ethical and effective service
within the financial advice sector, Principal & Prosper have
been operating in Edinburgh since 2003. By promoting
and supporting their staff, they have been able to achieve strong
and continued growth, developing from the management
of assets totalling circa £100 million in 2009 to £1.4 billion
today. AChartered firm, they have always adopted a fee-based
approach as they view the sector as primarily a service industry.
Frustrated by the recent actions of some firms, Managing
Director Chris Purves explains the issues within the sector and
how they work to keep the client’s best interests in mind.
I established the company in 2003 after working in the industry for a number
of years. Originally, I was working in fee-based actuarial firms before moving to
become an independent adviser for one of the well-known banking groups. While
working at the bank, I was advising a large corporate client, who had asked me to
set up my own practice. I had become increasingly disillusioned with the bank and
their commission-based income model which went against my personal values of
transparency and ongoing service. This was the catalyst for me to set up my own
company with the financial backing of this client.
From the outset, we adopted a fee-based approach. We also invested heavily
in our systems, processes and people. We believe it is our duty to look after our
clients and help them plan all aspects of their finances both now and in the future.
Providing excellent client service is key to our services.
I bought out our investors in 2008 as they were keen to sell the company as other
larger competitors had become interested in acquiring our business. At this time, I
brought in my business partner and co-owner, Stewart Siegel.
Our commitment to a fee-based approach
We pride ourselves on the quality of advice we offer and the ongoing service we
provide for each of our clients. The business has grown dramatically since our
inception. In 2009, we were managing assets of around £100 million. Today that
figure has grown to approximately £1.4 billion.
The Retail Distribution Review profoundly changed the industry and all “independent
whole of market” advisory companies had to move from a commission-based to a
fee-based system. In addition, this legislation also raised the bar for expected individual
adviser qualifications. As a result, numerous businesses were forced to change
drastically or fold. As we had been committed to a fee-based approach from our
inception, we were largely unaffected by this legislation and did not need to change
our business model. While others were struggling with this new regulation, we were
able to grow. The way we had established our business was soon enshrined in law.
»Managing Director: Chris Purves
»Founded in 2003
»Based in Edinburgh, Glasgow
and Kelso
»No. of employees: 45
»No. of clients: 2,520
Principal & Prosper
We are acutely aware of the highly
regulated industry we are part of. Our
approach is to have this regulatory
compliance embedded in our business
both culturally and procedurally. In
taking this approach, we want to take
away the idea of compliance being
an obligation and view it as part of
the client process. Compliance does
not need to be a barrier; it is simply
a necessary system to ensure the
morality of the work we do.
We tailor the advice we give to our
clients in terms of timeframe and any
other necessary specifications. We
purchased a business in Kelso and
acquired a group of highly qualified
advisers from a National Accountancy
Practice in 2013 but our organic
growth has outweighed the effects of
this. Last year, we added £400 million
in assets under management to the
business and this year we have already
supplemented that with a further £200
million. We have an extensive internal
support network for our main group
of 12 advisers to ensure we are able to
provide tailored advice.
We have been able to nurture the
development of our staff, and we
have grown from eight employees to
45. Only one staff member has left
in nine years. We are committed to
treating our employees well as we are
very aware our success is based on the
quality of the people we employ. We
have a young yet highly qualified team
who all work to well-defined client-
Rogue firms and bad advice
The biggest issue within the sector
surrounds the provision of defined
benefit advice. The amount of advice
in this area has spiked as a result of the
pension freedoms reform announced by
George Osborne in the 2014 budget.
Many firms are providing this advice
without the expertise required to do
so. This will inevitably lead to some
further bad publicity for the sector.
Only recently has the sector come to
be viewed as a profession, and the
unscrupulous nature of some companies
threatens this progress. The scandal
surrounding British Steel has proved this.
As public awareness of the pension
freedom reform has grown, so has the
perceived knowledge of prospective
clients. Many clients are acting against
professional advice by insisting that
they wish to transfer their pensions
regardless of any potential future risks
or pitfalls. Unfortunately, there are
firms who are willing to facilitate these
transfers in the knowledge it is not
in the client’s interest. This approach
does nothing for the reputation of our
industry as a whole.
Regulators have a very difficult job,
but it is essential they try to prevent
this. Professional indemnity insurers
are looking to pull out of the market
or increase their premiums because of
these types of practices. British Steel
received damaging advice from two
or three firms who were subsequently
pulled in front of parliament. These firms
have since closed down but are likely to
reappear in some guise. The closure of
these firms means companies like us,
who adhere to strict moral standards,
are forced to pay higher financial
services compensation fee levies.
The closure of businesses provides
possibilities for us. As firms close,
there will be opportunities to acquire
businesses and service the clients
they have left behind. We will not do
this, however, unless the situation
is correct. The levels of our organic
growth may mean such acquisitions
are not necessary and the business
we gain from client referrals may be
entirely sufficient. Although the sector
is held back by these rogue firms, we
are confident that by sticking to our
central principles of ethical practice and
assessing the individual needs of every
client, we will be able to continue our
growth and act as an example of best
practice within the sector.
excellent client
service is key
to our success

This article was sponsored by Principal & Prosper. 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 Rt Hon Kwasi Kwarteng.

Rt Hon Kwasi Kwarteng's Foreword For The Parliamentary Review

By Rt Hon Kwasi Kwarteng

This year’s Parliamentary Review reflects on a tumultuous and extraordinary year, globally and nationally. As well as being an MP, I am a keen student of history, and I am conscious that 2020 would mark the end of an era. It will be remembered as the year in which we concluded Brexit negotiations and finally left the European Union. Above all, it will be remembered as the year of Covid-19.

In our fight against the pandemic, I am delighted that our vaccination programme is beginning to turn the tide – and I pay tribute to the British businesses, scientists and all those who have helped us to achieve this. But the virus has dealt enormous damage, and we now have a duty to rebuild our economy.

We must ensure that businesses are protected. We have made more than £350 billion available to that end, with grants, business rates relief and our furlough scheme supporting more than 11 million people and jobs in every corner of the country, maintaining livelihoods while easing the pressure on employers. The next step is to work with business to build back better and greener, putting the net zero carbon challenge at the heart of our recovery. This is a complex undertaking, but one which I hope will be recognised as a once in a lifetime opportunity.

Through the prime minister’s ten point plan for a green industrial revolution, we can level up every region of the UK, supporting 250,000 green jobs while we accelerate our progress towards net zero carbon emissions.

With our commitment to raise R&D spending to 2.4% of GDP and the creation of the Advanced Research & Invention Agency, we are empowering our fantastic researchers to take on groundbreaking research, delivering funding with flexibility and speed. With this approach, innovators will be able to work with our traditional industrial heartlands to explore new technologies, and design and manufacture the products on which the future will be built – ready for export around the globe.

And I believe trade will flourish. We are a leading nation in the fight against climate change. As the host of COP26 this year, we have an incredible opportunity to market our low-carbon products and expertise. Our departure from the EU gives us the chance to be a champion of truly global free trade; we have already signed trade deals with more than 60 countries around the world.

As we turn the page and leave 2020 behind, I am excited about the new chapter which Britain is now writing for itself, and for the opportunities which lie ahead of us.
Rt Hon Kwasi Kwarteng
Secretary of State for Business, Energy and Industrial Strategy