Congratulations to Nexus IFA, independent finance and mortgage advisers, based in Bridgwater, on becoming the latest winner of our Apprenticeship Employer of the Month award.
We’ve been working with director Phil Frapple, office manager Martyn French and Business Admin apprentice Victoria Tucker for over a year and have been impressed with their commitment and support. This award celebrates their ongoing commitment to the training and development of apprentices.
Nexus Advisers Phil & Harry Frapple along with Paraplanner Harrison Angove at the Citywire NMA On the Road event in Chepstow, where delegates had the opportunity to sit down with a line-up of top-performing portfolio managers, covering just about every possible asset class.
What would you do if you had a sudden windfall of £1 million? These young leaders in the advice profession think they know
Name: Harry Frapple
Title: Financial adviser
How would you invest it?
The first thing I would do with a million pounds is purchase a house, let us say for argument's sake one worth £200,000. Living without a mortgage at the age of 22 is the dream, right? The next logical step has to be to maximise a stocks and shares ISA with £20,000.
After this, I would put another £250,000 into a stocks & shares GIA with a bed and ISA to enable the maximisation of the ISA every year. This would then leave me with a cool £530,000 left to play with. Of that, I would place £200,000 into a venture capital trust (VCT) to gain the 30% tax relief. To create long-term wealth, I would keep £250,000 to invest in the firm I am currently employed by, leaving £80,000 as a rainy day fund.
Where would you invest it?
Coming from a firm that believes in discretionary fund management I would take a different approach. First thing would be to asses my attitude to risk and capacity for loss which comes out as moderately adventurous. Based on this I would use a DFM to build a bespoke portfolio around my aims and objectives.
How much would you keep in cash?
Having £80,000 in cash would be more than enough as a rainy day fund!
I think the modern way of doing financial planning is to maximise ISAs so you can plan for a tax-free future. VCTs are exciting products that can offer you a great amount of tax relief.
Frapple grapples with lack of youth in advice
Audience development executives Bhavna Koli and Ashley-Thomas Walsh caught up with Phil Frapple, director of Somerset-based Nexus IFA, at the Quilter Cheviot roadshow earlier this year. At the Leigh Court venue in Bristol, Frapple bemoaned the lack of young people in the profession.
He joked that many of New Model Adviser®’s ‘Top 35 Next Generation Advisers’ last year were nearer the upper end of the age spectrum.
On the topic of the next generation of advisers, Frapple mentioned his son Harry Frapple, 21, and Paulo Costa, 22. The pair joined the firm as trainee advisers in 2016.
Somerset-based Nexus IFA, a serial buyer of other IFA firms, has reached a deal with advice firm Amber Associates. But, it is not an acquisition.
Ian McIver, development director at Nexus IFA, confirmed it does give the two advisers at Amber, which has £20 million of assets, a future retirement option further down the line, as well as use of Nexus IFA’s centralised administrative and paraplanning resources.
McIver said he chose not to go through the normal acquisition process because the advisers are still young, with both wanting to focus on spending time with their clients.
‘What this deal has shown is the value of administrative and paraplanning centralisation,’ he said. ‘Advisers recognise running as a one-man band is fine, but eventually you run out of steam. Unless you do not mind a lower turnover, you need administrative resources.’
McIver said coming under the ‘wing’ of Nexus IFA is a great way for a small advice firm to grow its business.
Consolidator Nexus IFA has completed its 25th acquisition with a deal for Somerset-based Francis Financial Services.
Founded in 2002, Francis Financial Services has 200 clients with £9 million in funds under advice. The advice firm, which has one adviser, was a member of the Tenet network.
Ian McIver, development director at Nexus IFA, said the deal, for an undisclosed amount, has been made on a ‘cash’ basis where the adviser is paid over a two year period.
This contrasts with the so-called annuity deals which Nexus IFA also makes. In this type of deal the acquired adviser is paid over a 10 year period to encourage them to keep the clients with the business.
McIver added he expects the firm to keep making acquisitions over the coming months.
‘It is number 25 but there are plenty of others we are looking at,’ he said. ‘We are always looking and there are plenty of enquiries and plenty in the pipeline.’
Following the deal, Francis Financial Services’ director Nigel Francis will be retained to continue with the client relationships, McIver added.
Although consolidators are in line to be hit worst by the Financial Conduct Authority’s (FCA) planned ban on legacy trail commission, one acquisitive advice firm has welcomed the change.
Meanwhile other IFA firms have said it is about time the FCA cracked down on unscrupulous advisers who take legacy trail for little to no work.
Many consolidators have acquired large books of legacy business, including books from retiring advisers, and could be hit by the changes.
The regulator warned that some investors ‘do not remember from the point of sale disclosure that they are paying trail commission, or are unaware of the adviser receiving the payments’. This is because advisers can sell their legacy books without informing investors, it said.
But Ian McIver, director of development at Somerset-based Nexus IFA (as of July 2016, Nexus had acquired 25 firms through consolidation, and has around £400 million in assets under advice), said the FCA would struggle to enforce any such ban.
‘There are two ways you can see it,’ said McIver. ‘The general point consolidators will want to make is that legally, it’s a bit challengeable. Whether the FCA is right or wrong, trail commissions are part of a post-retail distribution review legal arrangement, which is sticky ground. I don’t think it will happen, personally, as it’s unmeasurable and won’t achieve what they want it to.’
However, he said it was ‘a great opportunity for firms that have taken on client banks to look at that book and get the clients re-engaged in an active post-RDR framework’.
He said moving on to his firm’s ongoing charges agreement would cost clients more.
‘Our standard [ongoing service] model might be slightly higher but because of the discounts and other benefits we can obtain, it ends up being better for them to stay with us. It’s a great opportunity for firms to say “yes, there is a bit of tidying up to do, but it will be beneficial in the long run”.
‘If those clients leave rather than moving over to a more fitting model, the only winner will be the providers. There will be no tangible benefit for consumers.’
The acquisitions market has many pitfalls for both advisers and acquirers
With the list of potential suitors growing, advisers may be more tempted than ever to sell their firms.
Whether they want to retire or just take a step back from management, advisers have plenty of options; they can turn to household names like Old Mutual Wealth or Standard Life, or to newer consolidators like Bellpenny or Fairstone.
But are the deals on offer worth the price? Money Marketing delves into the mechanics of buyouts to see where advisers are cashing in and losing out.
Bridgwater-based Nexus IFA has secured a deal to buy Hertfordshire-based Clive M Goodchild & Partners, adding 150 clients and £14 million in assets.
Clive M Goodchild is a sole trader advice firm run by director Richard Smith, who will no longer be authorised by the regulator to give financial advice after the deal.
Ian McIver (pictured), development director of Nexus, said the deal was being done on an annuitised basis, rather than as a capital upfront payment, with the payment for the advice firm made over a period of 10 years.
McIver said these payments allowed the firm to make use of the new client bank. The annual payments to the seller depend on ensuring the clients stay with Nexus, with the amount calculated based on recurring income.
He said this model of the deal was why Clive M Goodchild was attracted to Nexus.
‘We were speaking with Richard Smith for around two years and he saw a letter in the press about how there are two ways to purchase an IFA firm: annuitisation or upfront cash,’ said McIver. ‘He picked up that we do the former.’
Smith will help with the relationship his former clients have with the acquiring firm.
It is good to see an increasing number of words being written about the need to find new advisers in our profession, i.e. apprentice funding, the new PFS Aspire programme.
But, there is still the underlying problem that new entrants do not arrive at an IFA firm and hit the ground running. Think of the parallel scenario with a lawyer. New entrants arrive with a law degree and much of the technicalities under their belts.
I recently paid a visit to university in south Wales and was saddened by the news that they have just stopped their financial planning degree. This degree was accredited at level four by the FCA. That means a firm taking on a recruit from this course is broadly 'ready to go aside from competency sign off / training.
The number of students needed to run the course was 15. How sad. I am told there is a regular queue outside the law degree door.
Fathers take pride in saying: "Here's my Jimmy, he's going to be a lawyer". I bet my bottom dollar that when Jimmy came back earlier from the careers office and said that there was also an interesting financial planning course on offer that he was probably dissuaded by his father.
It's not as credible.
If we really wanted to solve the issue of getting new entrants to the profession then the regulator should be talking to universities and discussing how to get level four accredited courses more widespread throughout the UK.
Ian McIver, Development Director, Nexus IFA
I saw an interesting social media discussion questioning whether a discretionary fund management (DFM) solution was worthy of continuance.
An interesting third party view made a good point saying that if you do it yourselfand invest in fund(s) of your choice, you are still giving managers discretion over stock selection. There is an element of discretion in any choice you make, I would agree.
My view reverses the question: if you don't follow a DFM/outsoutced model then what's the alternative? 'Too many advisers feel they need to be doing more to 'substantiate' their fees. If it's simply to substantiate their fees then they end up at the same point as someone who works smarter and ironically then has more time with their clients. Clients value your time.
Ian McIver, Development Director, Nexus IFA
Phil Frapple and Chris Rigby have worked tirelessly to progress Somerset-based Nexus IFA from a tight-knit, family-run firm into a serial acquirer of other small businesses
The sleepy town of Bridgwater, with its quaint character, might not be the obvious home of a firm making strides towards becoming a national IFA. Nonetheless, Bridgwater-based Nexus IFA has been thriving from its South West base, making numerous acquisitions as it stamps its presence across the UK. Is it on the path to becoming another faceless consolidator? No chance. It operates as a friendly, family-run firm, while building the economies of scale of a big business.
While its owners, directors Phil Frapple (pictured left) and Chris Rigby (right), are adamant Nexus is focused on its service for clients, it is practice buyouts that have fuelled its ascendancy and taken it beyond £400 million in assets under advice. Such acquisitions are typically of one and two-man bands with turnover between £100,000 and £200,000, and all involve IFAs with ‘well-loved and managed client banks’.
Retiring IFAs usually enter an earnout scheme whereby they share in the income from their business while reducing their liability. This can be particularly lucrative for the seller because Nexus’ processes and economies of scale make the client bank more profitable, leaving some IFAs with a higher annual income than they previously received, albeit temporarily. The directors say this model means Nexus can fund its buyouts entirely through its own profits, and has taken on no debt.
‘The traditional IFA deals equate to three times your income, but the Nexus offer often works out as roughly double that,’ says Frapple. Nexus keeps the selling IFA at the heart of the process, ensuring he or she switches to an advocate role to provide a smooth transition. ‘It benefits everyone, there’s longevity to it, and the clients tend to stick,’ says Rigby.
The company works hard to ensure firms will be a good fit for the Nexus proposition, and since 2014 has called upon the services of development director Ian McIver, who travels the UK to find suitable ventures.
After a long and bitter campaign, Donald Trump has beaten Hillary Clinton in the race to become the 45th President of the United States. Professional Adviser asked three advisers what, if anything, this could mean for their clients and their businesses.
When Donald Trump emerged victorious after securing the final electoral votes he needed to become US President-elect, there was a sharp intake of breath through much of the rest of the world.
Arguably the most controversial US Presidential candidate in modern history, Trump is nothing if not a wildcard - and markets reacted accordingly as his win was confirmed.
A Trump presidency has huge implications for the US and the rest of the world, but what, if anything could it mean for the UK's financial advisers and their clients? Here's what three had to say ...
"Feels like Brexit"
Ian McIver, development director, NEXUS IFA
"This just feels like the day Brexit was announced. Markets will probably dip down, and then it'll be good. Ultimately, the world keeps turning. It's already started to recover so I think it will be business as usual. This is the US's equivalent of Brexit. It will go through the same sort of shape, and eventually it will be fine.
"Our philosophy has always been that we use DFMs. Financial advisers are too slow to react but DFMs know exactly what's going on and have control of the situation. An adviser doesn't have DFM positions - they don't have the ability to handle the money, they merely pass it on. We're happy our DFMs will have read the market some time ago.
"I'm relatively optimistic because of what we've seen with Brexit. I'm a realist - I think in the annals of history they'll look back and see 2016 as the year the proletariat thought they'd have a dig at the establishment. We did it with Brexit; they're doing it with Trump.
"But the US president doesn't have as much power as some people might think. Politics is a slow, sludgy, sticky sort of game. Trump, like every politician, will get pulled into it. The wheels turn a heck of a lot slower, and I think all the warmongering and scaremongering won't actually happen."
"The first thing a seller suddenly realises is actually all the cash doesn’t arrive at once"
Ian McIver is development director at Nexus IFA
Somerset-based advice firm Nexus IFA has boosted its assets under advice to £400 million by acquiring a North London-based firm.
Ex-Whitechurch Network boss Ian McIver’s latest venture Nexus IFA has bought sole trader firm Atlas Advisors from director Jeff Bromley, which has around £20 million in assets and around 300 clients.
The acquisition has boosted Nexus’ assets under advice to £400 million, and is the firm’s 25th.
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FTAdviser Blog | Published May 01, 2014
On the criticism surrounding Tenet charging advisers £500 to leave its TenetConnect adviser network, I used to run a network and I am proud of the fact it was easy to get in, and easy to get out.
If you run a network properly, then the customer has the right to say that they no longer wish to be in the club. That could mean that they have outgrown the need for membership, which is positive and means the network helped them in their business plans, or, more importantly, if they leave for any other reason, then the network has failed. Put bluntly, I always used to say that no member was born with a tattoo on his or her behind saying that, when they graduate as an adviser, they have to join network X and indeed stay forever. The problem seems to be that network X invariably sees it that way.
The real issue is also that network members are getting a tad hacked off that they are always quoted as having the value in the food chain and indeed ownership of the clients, yet someone else picks up the cheque when the network is sold on. As a member of mine said to me not so long ago: “What is in it for me?”. Exactly – just when does he or she pick up a cheque for their share of the value chain? The final fly in the ointment is professional indemnity insurance, or more precisely the need for PI run-off cover. We need an open debate on what this is all about. If a network asks for such cover, then what is the point of a network membership? RDR has changed the whole landscape for advisers. Networks that do things right are still all right, and if not, vote with your feet. One should be able to put those walking shoes on without fear of being unjustifiably penalised.
Development Director, Nexus IFA
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Published 7th April 2014
Tony Menghini of MI Financial Services (a trading style of Nexus IFA) talks to New Model Adviser magazine about how financial planning can help local government employees facing redundancy.
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Published 9th March 2014
Nexus IFA adviser Tony Menghini, based in Trowbridge, has been voted one of the Top Rated Independent Financial Advisers (IFAs) in the UK on consumer ratings site VouchedFor.
Satisfied customers voted in support of Mr Menghini on the comparison website praising the high level of customer services he provides.
His rating on the website has seen him feature in The Times, Independent and Mail on Sunday.
Mr Menghini said: “I’ve been an independent financial adviser for over 20 years and being recognised as a top rated adviser in the UK is an amazing feeling. In today’s testing times it is more important than ever that people plan for the future. An adviser can save you thousands, be that getting the right advice at retirement, value for money on protection arrangements or making the right decision with your investments.”
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Published 23 August 2013
Somerset independent financial adviser Nexus IFA has acquired a business in Surrey, which takes its assets under advice to more than £220m.
The Bridgwater-based company has bought Pensionline in Epsom for an undisclosed sum.
Nexus IFA has bought 19 other firms over the last two years and currently has more than 10,000 clients across the UK.
Phil Frapple, Nexus IFA director, said the retail distribution review (RDR) had been a crucial factor in the firm’s decision to expand.
"We saw there would be an opportunity to offer IFAs retiring or winding down their involvement in advising, a different solution than simply selling up or closing down," he said.
"A solution which would not only benefit their clients, ensuring the quality and high standards of financial advice were maintained and not leaving them as adviser orphans, while also benefiting the IFAs themselves as we value their continued input as part of our firm."
Pensionline was founded by Jon Minchin 23 years ago.
Published 22 August 2013 | By Iona Bain
Nexus IFA has continued its acquisition spree by snapping up Surrey-based Pensionline, its director Phil Frapple has revealed. The deal will raise assets under management at the Somerset-based firm to more than £220m.
Pensionline, founded by Jon Minchin in 1990, was snapped up by Nexus as part of its strategy to capitalise on advisers tempted to retire or close firms post-RDR.
Phil Frapple, director of Nexus, said: “We saw there would be an opportunity to offer IFAs retiring or winding down their involvement in advising, a different solution than simply selling up or closing down.
“This would not only benefit their clients, ensuring the quality and high standards of financial advice were maintained and not leaving them as adviser orphans, while also benefiting the IFAs themselves as we value their continued input as part of our firm.”
This is the 20th acquisition made by Nexus in the last two years. The firm currently has more than 10,000 clients based throughout the UK.
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Published 21 August 2013 | By Sam Macdonald
Nexus IFA has acquired the client bank of Surrey-based IFA firm Pensionline.
Pensionline has assets of around £21m across 250 active clients with founder Jon Minchin continuing to remain in contact with clients as part of the handover process.
The acquisition, its nineteenth in the last three years, takes Nexus' assets under advice to £220m and increases its client bank to 10,000.
Nexus IFA has five advisers and is in discussions with a further seven firms about buying their client banks.
Director Phil Frapple says: “We think we offer IFAs retiring or winding down their involvement in advising a different solution than simply selling up or closing down.”
Nexus is an AR of The Whitechurch Network which was acquired by IN Partnership parent the On-Line Partnership Group in May last year.