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intermediary profile Spectrum ifa Group

March 2010 [www.international-adviser.com] INTErNaTIONaL aDVISEr

By helen Burggraf

It is such a cold night in the Vila Nova de Gaia district of greater Porto, Portugal’s second-largest city, that you can see your breath. Around 30 mostly male financial advisers are being herded on to a coach that will take them back to their hotel from the Graham’s Port winery, where they have just had dinner, having previously been given a tour of Graham’s 120-year-old port-making facilities. The second evening of Spectrum IFA Group’s annual conference is coming to an end.

Spectrum holds its annual conferences in a different city each year, as a reward for the company’s

in a way that, like an extended family, it gives its members the moral sup-port they need.”

A few days later one of Davies’s colleagues added: “I never worked in any company whose princi-ples are as high as here. I left the last three firms I worked for because they were the opposite.”

l Long-term friendsWhile it is not unusual for employees to gush about their employer in the pres-ence of a journalist, some-thing about the way these Spectrum advisers behave around one another, and in the presence of the three founders, suggests that it is not just an act.

Of course, part of what one is picking up on in any gathering of Spectrum IFAs is the fact many of them have known one another for upwards of 20 years.

As their careers took them around stations of the cross of the UK offshore financial world such as the Isle of Man, Luxembourg, France and southern Spain, these advisers formed friendships that outlasted their various postings, and which evidently have grown deeper since many of them joined Spectrum.

Founders Michael Lodhi, Anne Ollerenshaw and David Holmes are no different. Their paths first crossed in the early ’90s, when Ollerenshaw and Holmes were working

best performers as well as a working event, typically featuring talks by product suppliers such as life com-panies and funds houses.

Watching his colleagues wandering amicably in the direction of the coach, Switzerland-based, UK-born Spectrum consultant Robbin Davies, seated just behind the driver, likens the annual conference to a family reunion, and says the gathering and others like it are an important part of the company’s success.

“Being an IFA is a lonely business. You are judged by your results, and you have to produce them,” he explains. “Michael [Lodhi, one of Spectrum’s co-founders], recognises this, and designed Spectrum

All for one, one for all

Spectrum IFA Group’s financial advisers say the company, which has operations in six countries, adheres to a corporate philosophy that treats both its staff and clients fairly

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Spectrum is marking its seventh year in business in 2010.

Founders and former Hansard colleagues Michael Lodhi, Anne Ollerenshaw and David Holmes set out in 2003 to create a different intermediary business model, including share ownership and a sense of family.

Product providers praise the company’s ethical and risk-aware philosophy.

Key pointS

38

intermediary profile Spectrum ifa Group

INTErNaTIONaL aDVISEr [www.international-adviser.com] March 2010

for Hansard International on the Isle of Man, and Lodhi was an adviser for Mondial, the direct sales arm of Hansard. At that point Lodhi, who today is based in Luxembourg, was working out of Mondial’s Benelux office.

“Then Anne went out to work in the Far East, I left Hansard in 1998, and Michael got involved in a brokerage operation in Luxembourg,” says Holmes, an Isle of Man native who remains on the island.

“So we did not work together after 1998 again until we founded Spectrum in 2003 but we knew each other all that time. And as you know, the inter-national financial services community is quite small and closely-knit.”

l New modelLohdi, whose title is chair-man, says that when he, Ollerenshaw and Holmes decided to launch their own firm, they looked at the kinds of companies they had worked for, and others in the industry, and decided to create some-thing different.

“When we set up Spectrum, we felt it would be a good idea if we con-trolled our own destiny – that is, that the people who were working in the business owned a part of it,” he explains. “So we put in place a structure where-by the advisers, once they had been with us for two years, would start earning a piece of it. I think we have about 35 sharehold-ers in total now.”

While the shares do not have any value at the moment, if the company were at some point to be sold, they could, he says.

In the meantime, the Spectrum advisers are

separate entities – in some cases working for national companies, such as Baskerville Advisers in Spain and TSG Insurance Services in France – which in turn are under con-tract to Spectrum, through which they are licensed and under whose banner they market themselves.

l Client type varietyUnsurprisingly for a firm whose advisers operate in 11 markets in six countries, Spectrum caters for a range of client types.

“Principally we are tar-geting British expatriates,” says Holmes. “They prob-ably represent more than 90% of our clients. But we are able to do busi-ness with others living and working in the six countries in which we are licensed – providing they are happy to work with financial con-tracts that are in English.”

Ollenshaw, who is French by birth but lives and works for Spectrum out of Barcelona, adds: “Our clients vary enormously, depending on the area. People who live in Paris or

Barcelona tend to be work-ing, and their needs are different from the retired clients who live on the Côte d’Azur, Malaga and so on.”

l Hand of technologyThe Spectrum found-ers note that technology, which was partly respon-sible for the rapid growth of the offshore advisory business in the ’80s – with the introduction, Holmes notes, of the fax machine – continues to shape the industry as it evolves.

“But our job is still to talk to people, it is still a relationship business,” says Ollerenshaw.

Adds Lodhi: “Financial services have to be sold. People are not generally pro-active about this stuff. I have been in this busi-ness a long time and I could count on two hands the number of times I have had phone calls from someone saying ‘I want to sort out my retirement, I want to buy a life insur-ance policy’.

“It is only once people meet [a financial adviser] and start talking about their

When we set up Spectrum, we felt it would be a good idea if we controlled our own destiny – that is, that the people who were working in the business owned a part of it

“

”Michael lodhi, chairman and co-founder, Spectrum Ifa group

finances that what might happen to Mrs Smith at home with the three Smith children if something were to happen to Mr Smith that Mr Smith begins to think it might be a good idea to have a Plan B in place.”

Lodhi adds that most of Spectrum’s clients “are more sophisticated than that” but still argues that for many people who are struggling to balance pay-ments for cars, televisions, mortgages and children, “financial planning is gen-erally a low priority”.

Like most advisory firms with offshore and expatri-ate clients, Spectrum advis-ers work entirely on a com-mission basis, a model that has fallen out of favour in the UK, under pressure from the Financial Services Authority. UK financial advisers have been told that they will have to move to a fee-based remunera-tion model from 2013.

Lodhi is unconvinced that commission is inher-ently bad or unfair to cli-ents, arguing that “what is relevant for the customer is the total cost of the transaction”.

At least one of Spectrum’s suppliers vouches for this approach, at least as Spectrum practises it.

John Hall, business development director for Standard Bank, which provides such products as structured products to Spectrum’s clients, says it is among the industry’s “top ten” advisory firms, not-withstanding its fee struc-ture, and he praises “the way they work [and] their ethics with their clients”.

What is more, he says, Lodhi is unusually adamant by industry standards in his insistence that there be no “soft commissions” hidden in the products Spectrum sells.

COUNTRY OFFICES

France Paris, Cote d’Azur

Spain Barcelona, Madrid, Javea, Costa Blanca, Costa del Sol

Luxembourg Luxembourg City

Netherlands Amsterdam

Portugal Faro

Switzerland Lausanne

european preSence

Founded: 2003

No. of clients: around 6,500

No. of employees: 46 advisers, seven other employees

Locations: Six countries (see box out below)

No. of offices: 11

Website: www.spectrum-ifa.com

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