After founder Karen Vidler passed away, AV Trinity has relied on Cliff Patterson and Louise Morris to build on her legacy, managing the firm’s costs and preserving its traditions.
AV Trinity’s office is situated on a hill overlooking Tunbridge Wells: a building clients can pop into as much to meet the office dog Finn as to catch up on their financial plan and investments.
Almost a year ago the managing director and founder of the firm, Karen Vidler, passed away. Since then the team she had put in place to take the business forward has carried on her legacy of charitable work and caring for staff and clients, while deciding to revamp the business model.
Vidler asked Cliff Patterson to join AV Trinity two years ago to look after the team of advisers. Director and chartered financial planner Patterson comes from a background with providers, working as a mortgage broker and tied adviser before becoming an IFA and then working in compliance.
‘I had worked in the compliance department of Best Practice Group for six months when Karen approached me for a compliance officer role at AV Trinity two years ago,’ says Patterson. ‘She asked me to look after the team of advisers here.’
CLIFF PATTERSON CV
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2014-present AV Trinity, compliance and operations director
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2014-2015 Best Practice Group, compliance supervisor
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2013-2014 Innovation Financial Planning, director
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2000-2013 Aviva, regional sales manager
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1998-2000 Norwich Union, training and competency supervisor
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1990-1998 General Accident/Commercial General Union, financial adviser
PROFESSIONAL MEMBERSHIPS/QUALIFICATIONS
Necessary restructuring
Director and financial planner Louise Morris has spent all of her working life as an IFA, or working for an IFA. She has spent 20 years of that career working at AV Trinity after Vidler brought her in as a director in 2008. In 2015, Vidler was not well and knew her outlook was not good, so she made additional appointments to form a board of three non-executives and two executives; Patterson and Morris.
Patterson describes having the three non-executives as a ‘good governance and supportive process’.
‘Louise and I make the main decisions and use them as a sounding board. One is an accountant, one is a solicitor and one has a background in working on boards of large charities,’ he says.
Patterson and Morris have worked fast and effectively as a team at the helm of AV Trinity, even though taking a hands-on management role was a big change for Morris.
‘When Karen passed away there was a significant change for me,’ Morris says. ‘Before that point I was involved in dealing with clients. There has been a steep learning curve over the past 12 months with the day-to-day running of the company and being more involved in the financial side. It has been hard work but enjoyable.’
However, she has no intention of leaving the advice side altogether as that is where her heart lies.
LOUISE MORRIS CV
- 2008-present AV Trinity, director
- 2000-2008 AV Trinity, adviser
- 1997-2000 AV Trinity, trainee adviser
- 1990-1997 Fairmount Trust, fund analyst
Tough decisions
The directors are moving forward with one eye on the legacy left by the firm’s founder. ‘It has given us the opportunity to continue with Karen’s ethos,’ says Morris. ‘She liked to be controversial.’
Some of the big decisions the pair faced were around staffing and costs, but having faced these issues head-on, the team is stronger than ever and next year costs will be lower. Contracts up for renewal (be they software, phone or filing storage) have been renegotiated and Morris says going paperless has made a ‘significant difference to costs’.
‘One of the difficult decisions was losing a personal assistant [PA]. We had the luxury of two PAs but in the modern environment, advisers do more themselves and client services contribute more. The paraplanners took up a lot of the bits and pieces a PA used to do. So the cost of a PA was eliminated from our costs,’ says Patterson.
The firm has begun to see the benefits of recruiting paraplanners. Just over a year ago Bryn Evans was brought over from the client services team to become a paraplanner, as he had expressed an interest in progressing.
‘Our plan is to focus on paraplanning. That is quite new for us. We brought in the first one [Evans] just over a year ago and he is a godsend,’ says Morris.
FEES
For the AV Trinity service, clients can expect to pay no initial fee while the two parties establish whether the working partnership would be suitable. At that point, there is a lot of research to do, such as collating data for a defined benefit (DB) pension transfer, for example. The team will then agree a fixed fee for an initial report.
‘We work out the fixed fee based on risk and the number of hours it is going to take, in admin and adviser time,’ says Patterson.
Morris says the fixed fee for the initial report is discounted and acts as a hedge against the client not proceeding. If they decide not to, that fee is chargeable. If they do go ahead, that fixed fee is factored into the percentage fee. She says it is very rare for it to get to the report stage, only for the client to say, ‘thanks but no thanks’.
The ongoing fee is between 0.5% and 3% and depends on how much work the client requires. Patterson says they would never have a blind percentage model, which could lead to someone being charged 3% on a high-value DB transfer.
Since AV Trinity implemented a system for calculating profit and loss on each client into the back office, the directors say they are able to ensure clients are more accurately located into the correct service level, and are paying the right fees.
‘On our back-office system we log our hours spent on each client, so we can work out profit and loss for each client. We can say if they are paying too much or not paying enough,’ says Patterson.
He says it is important to ensure clients with more assets are not overpaying.
‘We have conversations with clients where, if they have substantial funds under management, we subsequently reduce ongoing fees because we have to justify what we are doing,’ Patterson says.
Next generation
Morris is determined the firm will offer young people the opportunities that allowed her to progress, and says the best way to do that is by taking a chance on school leavers.
‘I am keen to encourage new blood into the profession,’ she says. ‘I came in as an office junior when I started and I want to make sure we are offering the same career opportunities to the next generation.
‘Last summer, we took on Dan Easton, who had had some work experience with AJ Bell. He has already progressed, so we have taken on another junior, Sarah Collins, who started in mid-January.
‘She did work experience with us last year while studying a business BTEC at the local college. She had a great attitude and was asking great questions. Sarah really has her head screwed on and is only 17. She is keen to get into the industry,’ says Morris.
Patterson admits the firm has previously had an issue with losing advisers it had trained up and a subsequent loss of clients. He says the new staff have come through a newly strengthened recruitment process.
In an effort to shape up the business and cut down on costs, Morris and Patterson have tightened up on targets. These are worked into the back-office processes as well as with advisers. It is clear what is expected of IFAs in terms of activities and outcome.
‘Karen would never come down on someone because they had not hit their target,’ says Morris. ‘It would be a case of sitting down with them and discussing what the obstacles were and try to find solutions. That is what we have been doing and it is paying dividends. This month, activity-wise, it is ridiculous how much is going on.’
Another reason the number of active clients is projected to increase to 1,160 in 2017, despite losing staff, is because AV Trinity has been making a concerted effort to re-engage dormant clients.
DFMs cater for most clients while re-engagement needs a tailored approach
Some of the clients that come back to AV Trinity after a period away have different requirements to the bulk of the firm’s clientele, who typically go into the centralised investment proposition (CIP) or use the services of a discretionary fund manager (DFM).
‘For appropriate clients we would generally use a DFM. Where the client is not highly cost conscious, for the most part that would be Wellian Investment Solutions’ active or passive models. If cost or very wide diversification is a factor, we consider Copia Capital Management’s range of exchange-traded fund model portfolios. We also have some clients invested with Seven Investment Management,’ says Morris.
‘Because of client re-engagement work, we have recently completed more straightforward personal pension planning. In these cases we usually use Royal London’s Governed Portfolios in accumulation and their Governed Retirement Income Portfolios for those decumulating funds. We also consider Old Mutual Wealth’s [WealthSelect fund range], which has performed well in a cost-effective environment using its collective retirement account.
‘Straightforward pension requirements are where we would step outside of a DFM, or where there are cost considerations or individual requirements.’
The firm reviews its CIP every six months. New Model Adviser® visited AV Trinity in a week it was doing its six-monthly review of the CIP and the hot topic of the review was how well it catered for the most cautious and highest risk-taking clients.
‘We will look at expanding our CIP. We have levels four to eight covered but have little for those who fall at two or nine on the risk spectrum,’ said Morris.
Happy helper
In the past couple of years Morris and Patterson have achieved a great deal, while coming to terms with losing a colleague and friend. Morris says having Vidler’s dog Finn in the office has helped in some way. He was adopted by a member of the team shortly after Vidler’s death and has been a faithful, friendly constant during a tough time of adaptation.
Morris has continued Vidler’s charity work and the firm still supports dog rescue charity, the Kit Wilson Trust for Animal Welfare, as well as the Hospice in the Weald, which Morris raises money for through sponsored running events.
Looking to the future, Patterson says the pair will continue to grow the business but are looking to ensure it stays in safe hands.
‘Karen did a huge amount over the years to create and grow the firm to what it is now and she regarded the business as her family and her baby, so we want to protect and continue to build on that legacy,’ says Morris.
FIVE TOP TIPS
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Have a strategic plan and vision covering at least three years.
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Communicate with staff about how business is doing against the plan.
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Always put the client rather than process first.
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Accept change.
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Encourage new blood to join the profession by recruiting and developing trainees.