Ward Goodman's Article in this weeks New Model Adviser

Charting new territory

By Mark Battersby | 00:01:00 | 04 November 2009

Simon Wilcox keeps Ward Goodman on course to a new model structure.

In 2008 Simon Willcox, director of Ward Goodman Financial Services, was invited to become an equity partner in Ward Goodman Chartered Accountants and a main board director. This shows how the financial services arm of the business is very much an integrated part of a bigger corporate entity and Willcox makes good use of the opportunities in that.

Having gone limited in 2000, Ward Goodman now has around 50 staff, with the financial services arm being one of the largest fee-based independent financial advice practices in Dorset.

The corporate flavour is illustrated by a directors’ assessment day Willcox went on in September when they assessed each other and did a swat analysis. ‘In fact the rest of the firm did an analysis on us – what our strengths and weaknesses were, what our opportunities were, what our threats were – and we as directors went away on a boat to discuss it.’
The right location

Ward Goodman Financial Services is based in the same premises as the accountancy practice, described by Willcox as a ‘big shed of a building’, at one end of Ferndown Industrial Estate, on the edge of beautiful countryside.

Previously the combined firm had offices in Fordingbridge and Ringwood. Willcox says that on a typical market day in Ringwood you could not move for the traffic. ‘Fine when we were a firm of 12 people with a small IFA practice and four parking spaces and maybe 125 clients,’ he says. ‘But when you are 50 strong with 700 clients you need a few more than four parking spaces; and we found having satellite offices was not as good as having one single office.

‘In typical accountants fashion, we looked at key things like lots of parking spaces, good access to the motorway, at the end of a dual carriage way on an industrial estate – with 100 and something car parking spaces.

‘At Ward Goodman we don’t have big fancy offices, we don’t have lots of advertising, but we do the things that count underneath,’ he says.

The big room we are sitting in is one of six meeting rooms, which the firm makes good use of. ‘We go into a room and draw in the people from the relevant departments, the tax guy or the trust guy, the company sales or purchase person, and you get them all round the table and you start planning, all under one roof,’ says Willcox.

With the premises on two floors, the downstairs contains the reception area with four meetings rooms, the human resources and marketing people, and an open plan office where the tax/trust team and the financial services team work together. Upstairs is the audit team, the large company accounts team and the small business accounts team plus the IT staff.
Monitoring value

Willcox stresses that the firm operates management accounts for each team to ensure they are adding value to the business. ‘We monitor that monthly, which enables us to see very clearly when "shifts" are occurring.’

One of the biggest shifts at the moment for the accountancy side is the use of technology and outsourcing of accounts and tax work, specifically to India, he says, ‘Effectively you have a 24-hour working environment. They are logging into your system in a secure environment to upload dividend payments and other information, and you are coming in the next morning and it’s done.

‘Your capacity effectively doubles and your staffing isn’t increased exponentially. Your cost of employing an individual tax or accounts person in the UK just to input data is extremely expensive. We’re using the same organisations as the large four accountancy firms are. This is not someone sat in a tin shed outside of Mumbai.’

The financial planning side of the business is more advanced, by a couple of years, on the outsourcing front, though not linking to India for any administration work, Willcox says. ‘We are smaller and able to deal with things more quickly. And financial services is quite an innovative area. We were able five or six years ago, having spoken to colleagues in the industry and gone to the States and spoken to planners out there, to start using wrap-based platforms and certain fund managers to run our core assets.’
Career trajectory

Educated at Blundell’s Boarding School in Devon, Willcox left at age 17 to join the army. He spent four years on tour in Berlin, Northern Ireland and the Falklands. ‘Anywhere cold,’ he says.

In 1987 he changed direction to become a financial adviser with various high street names, such as Woolwich and Nationwide, which culminated in him managing a high-profile building society branch in central London.

In that environment, he was doing mainly mortgage-driven work, seeing some extremely high-net-worth individuals who, surprisingly he says, knew no more than other people who came through the door. ‘They really needed financial help but I was restricted at the time to Guardian Royal Exchange and then Nationwide Life policies. I thought "I enjoy what I do, I would just like to do it in a completely unfettered independent environment".’

The turning point for him was going for an interview at Nationwide’s head office, where he underwent psychometric testing, ‘I always remember the debrief letting me down gently, saying I would never be a successful IFA. It clearly stated I wasn’t suited. So I said "fair enough" and I went and became one!’ he says.

‘I’m a great thinker. I’m a big picture planning type of person. What I struggle with is the report writing and the detail, which I class as being the boring compliancy stuff. So what I’ve done is to build an incredibly robust team that deals with all of that, and I go out and do the things I enjoy doing.’

His career path in 1995 led him to become an independent mortgage/financial adviser in Bournemouth. ‘I wasn’t brave enough to be an IFA at a big IFA firm because I didn’t have the knowledge and the background at the time. But my mortgage experience was reasonable so I set up a shop for an estate agency and did all its mortgage work – similar to the role I was playing at the Nationwide.’
The turning point

After a few years, he started to think that advising on endowments did not feel right, ‘I remember at the time that the Standard Life endowment was the only one I would ever deal with because it was the one that gave the adviser the least upfront commission,’ says Willcox.

He wanted to do proper financial planning and believed the answer to getting good quality clients was through accountancy and solicitor practices. ‘When you do the research you notice the solicitors touch the clients maybe once or twice every few years. But accountants touch their clients two or three times a year, do the tax return, the accounts and get involved in the buying and selling of businesses all the time. So what I found was I definitely wanted to be in league with an accountancy practice – a local accountancy practice because I wanted to stay down here.’

This took him to Ward Goodman, which had the same ideas about building an integral financial services arm within the practice; and his fee-based practice became part of Ward Goodman Chartered Accountants, regulated by the Institute of Chartered Accountants. He also had to take a 60% pay cut on the basis that it would be a regular income and growing for the future.
CV: Simon Wilcox

Simon Wilcox 3

Education: Blundell’s Boarding School, Devon. Left in 1983 at 16.5 years old

1984-88: Armed Services (anywhere cold, Falklands, Northern Ireland, Berlin etc)

Financial services career

* 1988-1990: Woolwich Building Society
* 1990-95: Nationwide Building Society, moving up to help manage a branch in The Strand, central London
* 1995-99: Independent mortgage/financial adviser in Bournemouth
* 1999 to date: Managing director of Ward Goodman Financial Services

Qualifications: FPC 1, 2 & 3. Currently taking (J01 & J02)

Interests: Sailing, family, travelling to unusual places (climbed Mont Blanc, Matterhorn and Dolomites, dog sledding in Arctic Circle)
Business evolution

Willcox says he is the type of person who keeps records of everything. To demonstrate this, he leafs through a folder he has with him and identifies the £100,000 of income Ward Goodman Financial Services did in its first year 1999/2000.

The business has grown on average 15% a year, though not evenly, while its business model has been evolving. Willcox says he decreased overheads by around 35% at the peak of the market because the business model was not right with too many people.

‘We basically moved back a step, and we brought in paraplanners who were far more qualified. There’s a big debate of what a paraplanner is. I suppose on the scale of a paraplanner – one being just a trainee administrator right up to the top – ours tend to be at the higher levels. They have chartered status or diploma status and they deliver a lot of our reports. And by using wraps over an extended period of time we’ve been able to reduce our overheads significantly.’

The staff now comprise three financial advisers, three paraplanners, two administrators and one office administrator managing £80 million of client assets.

Willcox compares every month of every year to look for business trends. He highlights it if it’s the best month of a particular year: £45,000 worth of income in August is proving this to be the firm’s best year yet.

This trend-bucking fact in such a difficult economic climate is due to a shift to fee-based income, according to Willcox. ‘The new money coming in is down by 50% but our turnover is up because we do far more fee-based work. We are billing for planning,’ he says.

Hence recurring income for 2009 is a healthy 60% and is projected to grow to 75% in 2010, with turnover anticipated to rise from £556,000 this year to £606,000 next.
Joint ventures

A key part of Ward Goodman Financial Services’ business strategy is the operation of joint venture companies for law firms, notably for one of Dorset’s biggest law firms Humphries Kirk.

Willcox says that many forward-thinking law firms, such as Humphries Kirk, have been looking at ways of integrating the financial planning process. One of this firm’s strengths is their private client work, including trusts, and this particular venture has been operating for five years.

Ward Goodman’s role in the joint venture is to set up the website and deal with the Law Society ethics committee to make sure all the relevant documents are regulated, plus staff training.

‘We spend a huge amount of effort and time in developing the joint venture company because it’s got its own identity, which is of that particular law firm,’ says Willcox. ‘But we explain that we will charge a monthly fee irrespective of whether they pass us business or not. Not surprisingly, there are law firms out there who say "we don’t want to do that". They want it all for nothing.’

The turnover from the joint venture companies is more than £200,000, which is included in the overall business figures for Ward Goodman Financial Services. This includes the dividends from the joint venture companies and Ward Goodman’s management fees.

The management fees, which are reviewed annually, will start off at say £2,000 per month for a 10-office law firm. As that firm gets larger, the board of directors (two directors from the law firm and two from Ward Goodman) will discuss what the joint venture company has done: ‘What you end up saying for example is "we are spending as a group 40% of our time looking after the joint venture company and 60% of our time looking after our own internal company. Therefore shouldn’t we share our costs proportionately?" And likewise if the turnover goes down in the joint venture company, you would expect a rebalancing to occur.’
Expansion plans

Willcox says there are local areas into which the firm wants to expand and Ward Goodman has been talking to law firms in those areas for two years. ‘It takes two to three years to get it right, he says.

‘The law firms themselves are going through huge changes and so there are senior partners in law firms talking to me saying "what do I do?" And we are talking about the strategy to get there in three years – because they know you don’t just flick a switch. You create a good financial service operation.’

Willcox compares the process of choosing law firms to work with to client segmentation, except that it is done on a business model basis. ‘It’s not how big a law firm is; it’s fundamentally the decision-making people behind it and how they operate.

‘You can have a huge law firm with 50 partners but you have to look very carefully at who the decision-making partners are. Are they near to retirement? Do they really want to go down the route of changing their practice considerably? Do they understand how financial advisers integrate – because unfortunately the consensus of opinion out there can be that financial advisers are the flog-it and leg-it, old school mentality.’

The law firms with which Ward Goodman tends to deal have groups of decision makers and they act as a corporate entity, says Willcox. ‘We find that easier to deal with. There are many law firms out there that have 10 partners doing 10 different things in 10 different ways. Maybe that business model works for them. It doesn’t work for us.’

In essence, the key people have to get on with Ward Goodman and they must be able to recognise the benefits of what they are doing. The joint venture structure means each party takes a 50:50 cut of the income after Ward Goodman’s costs to run it.

The financial advisers of the joint venture are based at Ward Goodman’s HQ because, Willcox emphasises, it is incredibly costly to put them in the law office.
Wealth management and client proposition

About five years ago, Willcox looked at the 2,500 people on the firm’s database with a view to client segmentation. He sought the help of Brett Davidson at FP Advance, who then spent a year advising on the process. Active clients now number 266, 80 of whom provide 70% of Ward Goodman’s income.

Willcox decided to develop two distinct services: financial planning and wealth management. The key difference between the two is that the financial planning service includes annual reviews and a service schedule. The charges are 3% upfront plus 0.5% ongoing. There is also access to fee-based financial planning but it is charged separately. Client assets tend to be less than £500,000 and sit on the Standard Life wrap.

The wealth management clients have more assets (on the Transact platform), often upwards of £500,000, and are charged 1% a year with the tax return included. ‘What we do with these clients is far more financial planning. We used to use Prestwood and Truth but we scaled back and we are undecided about what is available.’

At the moment the firm uses a system called Quad, which is an Excel-based forecasting program adapted for clients using stochastic modelling off 1st Software and other planning features. But Willcox says some software developments will be brought in on the back of the wraps. ‘In fact I’ve got the directors of Transact coming in to see me later,’ he adds intriguingly.
Forward thinking

As far as new business flows are concerned, the overall picture is that Ward Goodman’s biggest introducers are the existing clients, around 70% of the business. The 30% that is left over is split 50:50 between the accountancy practice and joint venture companies. Returning to that boat trip with the directors, Willcox says the five-year plan ‘is to be a firm that has got an incredibly good reputation’, to build up assets under management nearer the £200 million mark from the current £80 million and, ultimately, working towards the vision of having 200 very wealthy clients with £1 million each on a 1% income model.

‘My focus and effort in the past five years has been in bringing this all together to deliver a wealth management service with which I am happy. Unfortunately I’m very self-critical and never happy so I am always looking to improve what we do. This is the cross I bear, as do my team!

‘Our model is more of a new model corporate structure based on shared knowledge, which I feel the FSA needs to take account of. That said, my aim is for Ward Goodman Financial Services to be chartered by 2011.’
Five top tips

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Although it’s important to have the qualifications, it’s as important to hire people with the right attitude.
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Turn the wrong type of business away to protect the service you offer. This is one of the major differences between sale-led and service-led operations.
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Involve your team in creating the plan. Then continuously review what you are doing, involving them. This will help you build a strong team.
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Choose your wrap provider carefully. It will take significant time and energy to unwind if you get it wrong.
* Be patient. It takes a minimum of five years to build a decent fee-based practice, but once you have turned the corner it’s a great feeling for everyone.


To find out more about any of these stories or
Ward Goodman please contact 01202 875900