Firing Line: Rod Halling
Pam Atherton : Magazine: FinancialAdviser :Published Thursday , December 03, 2009
Rod Halling, managing director of InvestwithQ, talks to Pam Atherton about how the fresh investment manager plans to tackle the controversies over fees and transparency by standing up against that very culture
A group of sailing enthusiasts and former business partners have teamed up to launch a low-cost, discretionary investment management service for IFAs.
Their other passion, when not sailing, is to tackle the high cost, commission-driven investment culture associated with unit trusts which they say has served clients poorly during the economic downturn.
Hence the launch of InvestwithQ, the intermediary-facing arm of Tideway Investment Partners, which will be marketing its services to IFAs who wish to provide clients with a discretionary investment management service for their investments, whether this be personal pensions, GPPs, Sipps, Isas or share portfolios.
The idea is that IFAs can direct clients with investment portfolios worth at least £100,000 (and which are not being actively managed), to Tideway for individual discretionary fund management.
However, the IFA is entirely responsible for identifying suitable clients, doing the factfind, identifying the client's investment objectives and transferring the funds to an appropriate investment platform which Tideway is willing to deal with.
Tideway Investment Partners works closely with Sipp Centre, Selftrade, iDealing.com and iShares, but can manage client portfolios on any share dealing platform which allows trading in exchange-traded funds, bonds, investment trusts and direct shares.
Crucially, Tideway charges a fixed monthly fee of £50, irrespective of portfolio size, making it highly cost-effective for those with large portfolios. Even at £100,000, the service costs £600 a year, or 0.6 per cent, less than the typical 1 per cent charged by most discretionary managers.
In addition, InvestwithQ does not pay commissions to introducing advisers and will not invest clients’ money in any commission paying funds or products.
Rod Halling, managing director of InvestwithQ, said: "We want to give IFAs a transparent service, untainted by commission and one which is tailored to their clients' objectives and managed by an experienced investment team.
"We felt it was time that someone in the industry stood up against the culture of hidden fees and charges which are not disclosed under the total expense ratio. Our service is also totally compliant with the retail distribution review and will help IFAs move to a fee-based only service in the run up to 2012.
"The whole thrust of InvestwithQ is to bring discretionary investment management to the man in the street at a sensible price, with no hidden upfront fees, charges or exit penalties.
"Our overall portfolio expenses work out at 1 per cent a year or less and our investment focus is on asset allocation, liquidity, dividend income, geographical region, and market timing in order to preserve clients’ capital and income. We steer clear of unit trusts, structured products and other high-charge investments which erode the net investment return."
Mr Halling said that IFAs are suffering in the transition to retail distribution review compliance and that InvestwithQ will bring IFAs back to being the kingpin.
Tideway is also keen to manage clients' pension funds where these have been languishing unmanaged for years in GPP or stakeholder default funds because the employer sponsor has not provided the employee with advice.
Mr Halling said: "Millions of people are trickling money into pension funds and have been doing so over many years and it has just been left sitting there. We want to manage that money for them on a fixed fee basis, once the IFA has discussed with the client their attitude to risk and investment aims.
"Tideway can then invest the money in accordance with the client’s objectives. Obviously people can actively invest their pension money themselves, but relatively few people actually do so in practice and would welcome someone doing it for them."
He sees people’s disenchantment with pensions stemming from the way in which they have been sold historically with large upfront commissions which drove up charges and fund management fees.
Under the InvestwithQ proposition, the IFA remains in control of the client and agrees a fee with the client for the cost of advice and transferring the client’s portfolio to a platform which Tideway can work with.
Mr Halling said: "We have talked to a small band of IFAs who have all embraced the idea which we are very pleased about. Our aim is to have three to four IFAs in London and a number of IFAs around the country, ideally with one IFA in each major town outside London. We are putting together a marketing website for each of these IFAs to bring in leads for their region.
Heading the investment team of Tideway Investment Partners is James Baxter, an IFA who founded James Baxter Capital Management in 1989 with his wife, Ursula.
The business grew to £150m of assets for 150 private clients and trusts and was sold to their management team in February last year. Mr Baxter is AFPC qualified, with specific qualifications in portfolio management and advanced pensions advice.
After selling his fund management firm last year, he spent a year researching a better approach to portfolio management, as the bear market of 2008 uncovered the deficiencies in many modern portfolio management methodologies.
Mr Baxter said: “All we need is an authority from the client, through their IFA, that Tideway can manage its money on a particular platform, so that Tideway is the secondary party appointed to manage the money on it. Providing the platform allows trades in listed securities for £10 a trade we can work with that platform.”
He sees huge potential for IFAs to advise clients to transfer existing funds to Tideway, which have built up in company pension schemes such as GPPs, group stakeholders and group Sipps, while maintaining contributions to the employer sponsored arrangement.
The IFA can give advice on where to invest the ongoing contributions to the employer-sponsored scheme, while Tideway invests the existing funds which are transferred out.
Mr Baxter said: "We would encourage IFAs to approach clients with large accumulated pension funds to transfer this money and orphan funds to Tideway, as there are no exit penalties on most GPPs and PPPs."
Another member of the team, Daniel Fletcher, is responsible for IT and is currently creating active domains which will drive the InvestwithQ name to the top of Google rankings.
The fourth member of the team, Dane Halling, investment manager and a cousin of Rod Halling, is busy establishing an investment team in Exeter, the aim being to keep overheads and salary costs down by being outside London.
The four came together as a result of previous mutual business relationships and common interests in sailing and music. Rod Halling has owned and run businesses around London and West Country, with Daniel Fletcher. Some of Rod’s previous customers include Elton John, George Harrison and the sailor, Pete Goss. His twin passions are music, along with ocean sailing.
Mr Fletcher is an accomplished musician who on leaving university toured the world for six months with Dire Straits’ Mark Knopfler. He is also a keen rower and won the Senior South West Championship for Exeter Rowing Club.
Dane Halling, is another accomplished sailor as is James Baxter who likes yatching and dinghy sailing.
For the hard working team at InvestwithQ, unwinding clearly means heading for the nearest stretch of water to indulge their favourite form of water sport.
Pam Atherton is a freelance journalist
