Glasgow and Edinburgh wealth managers eye opportunities created by pension reform

Alan Reid.

Age:

45.

What is your business called?

Cornerstone Asset Management LLP. I am the managing partner.

Where is it based?

Glasgow and Edinburgh.

What does it produce, what services does it offer?

We provide wealth management services to high-net-worth individuals, but most importantly, we look after people whose financial planning needs are more intricate and require a broader approach than the general population.

Whom does it sell to?

A broad range of people across Scotland and, increasingly, the rest of the UK – entrepreneurs, senior executives, landowners, people who have inherited money and those who’ve worked hard to build up their savings. Often people come to us because of the specific issues they might be facing, such as problems related to inheritance tax or retirement saving.

What is its turnover?

For a business such as ours the main measure of size would be funds under advice, which for us stands at £140 million.

How many employees?

14.

When was it formed?

The official starting date was February 2011.

Why did you take the plunge?

Two elements, the personal and the business, came together and that was the real catalyst for us setting up Cornerstone.

On the personal front, you get to a certain age when you start to think about what you want to get out of life – and at that stage I had already worked for a few very large businesses, including Lloyds TSB for 15 years. In a large business, unless you are near the top, you don’t have a big say in what goes on, and often you see things done that you would do differently. That can wear you down after a while.

On the business front; we felt that the introduction of the Retail Distribution Review (which outlawed commissions and ushered in fee-based advice) would shake up the advice industry, and that in particular, you would have more people wanting bespoke advice.

What were you doing before you took the plunge?

I had a somewhat stop/start beginning in my quest to work for a smaller business.

After tiring of working for larger businesses, I had moved to a smaller boutique Scottish adviser called Albannach. All seemed well and good until it went and got taken over by Towergate, one of the biggest UK advice businesses. So I was back to square one!

That showed us that if we really wanted control, we’d have to set up in business on our own.

How did you raise the start-up funding?

The funding came from our founding partners – me, Jason Hemmings, Laurie Dempster - and a private investor. We used all the savings we had but there is no significant barrier to entry in the financial advice business in terms of cash outlay. Much more important is what you can bring in terms of expertise, and we had significant experience from working for 20 years in the industry.

What was your biggest break?

Often you can work for years without meeting people who are on the same wavelength – I was very lucky to end up working with someone like Jason, who had the same vision for the kind of business and service we wanted to offer. Likewise, we have a very good board behind us who provide invaluable guidance. The Chairman is Malcolm McPherson, senior partner at law firm HBJ Gateley.

What was your worst moment?

My most challenging moment was when it suddenly dawned on me that we had all these employees and their families who were dependent on us -- dependent on us making the right decisions and running a business in a sensible way. That’s always a sobering thought for anyone who owns their own business.

What do you most enjoy about running the business?

There are two aspects I particularly enjoy. First, you can’t work in the service industry unless you're a people person. I love meeting people, talking to people and finding out how I can help them. I also enjoy the innovation; we are constantly looking to develop the services that we offer. This part is very much a team effort, and I appreciate the camaraderie of working with colleagues.

What do you least enjoy?

The paperwork and strain put on the industry by the Financial Conduct Authority has meant a large part of management time is spent on non-client facing activity. Whilst we obviously believe in good administration, often a lot of regulatory form filling is repetitive, and therefore takes time away from looking after the client.

What are your ambitions for the firm?

The changes in pension rules have thrown a fantastic opportunity to our business – people who beforehand would have just gone and acquired an annuity need real advice now that they can literally do what they want with their money. We want to be the go-to company for anyone needing bespoke advice on how they can use the assets they have saved to enhance their lifestyle, and do the things they want.

On the more general front, we want to continue with our organic growth and to look at consolidation opportunities within the wealth management sector. We've always grown by increments and we intend to continue on that path – slow, careful growth, taking on the right people at the right time.

What are your top priorities?

Always keep clients’ best interests at the core of everything we do; always look to outsource non-core business; don’t be afraid to fee charge appropriately for the work you have done; no compromise on recruitment – always employ the best people, even to the detriment of time; treat your staff as you would hope to be treated yourself.

What could the Westminster and/or Scottish governments do that would help?

Reducing corporation tax would allow businesses to invest in people and technology. The increase in business activity would probably net the government more tax in the end as well!

What was the most valuable lesson that you learned?

There are two ways to make money: get up early and work until late, or strike oil in your back garden. To date I have not discovered any oil!

How do you relax?

I don't have much time to relax but, when I do, I enjoy socialising with friends and family, playing golf and supporting Motherwell F.C.