Ten firms in ten years: Tim Horrocks on rockwealth's first decade

This week marks the tenth anniversary of the birth of rockwealth. Founding partner TIM HORROCKS looks back at what he and his colleagues have achieved so far and spells out his goals for the future. Congratulations, Tim, on ten years of rockwealth. Looking back, what was it that led you to found the company in the first place? It was a different world in 2014 in many respects. We had just had the Retail Distribution Review, which was aimed at improving outcomes for clients of financial advice firms. The banks and a few big wealth management firms dominated the financial advice market. I had worked for big firms like those myself. I'd also worked for a couple of small independent firms. So I felt like I'd experienced all of the main options for clients, and none of them quite suited what I wanted to do. They weren't the sort of firms that I wanted to be part of. I felt I was at a crossroads and that my only option was to set up a new kind of firm that didn't really exist at that time. That was how rockwealth came about. It was in the summer of 2013 that I started mapping out what this new firm was going to look like — the charging structure, the investment proposition and so on. My children were very young at the time, and I remember making notes as my daughter went to sleep! I applied for authorisation from the FCA, and we finally got it on 7th February 2014. But nothing was set in stone at that stage, and I was still very open to new ideas. As a firm, you’re well known now, among other things, for your belief in evidence-based investing. But that wasn’t there on Day One, was it? That’s right, it wasn’t. I was always very much of the opinion that financial advisers aren’t, or at least shouldn’t be, investment managers. I was resolute about that from the start. So we had an outsourced investment solution and used model portfolio services. I always knew we should concentrate on financial planning and not on the management of the money itself. But then, two years after the launch, Mark Vail joined me, and he brought with him a passion for evidence-based investing. He had gone through the Dimensional Fund Advisors process and really believed in that. I was fully on board straight away having believed in indexing solutions for some time, but without access to an outsourced investment management option. Then it was a case of educating our clients and explaining why that was the best solution for them. ‎Tim Horrocks, founding partner, rockwealth

‎Tim Horrocks, founding partner, rockwealth

It was quite unusual for advice firms to embrace evidence-based investing in those days, but now this approach is much more common. What do you think made the difference? There was a real lack of information out there ten years ago. I had been doing the job for more than ten years by that point, but it was hardly ever talked about. Financial advice was my full-time occupation, and yet even I hadn’t properly grasped the benefits of indexing. That really made me think, How are clients going to know about it if even advisers don’t? We decided that evidence-based investing was definitely the way to go, and we made it part of our mission to educate clients and prospective clients about it. The YouTube channel and the documentary we made, Investing: The Evidence, were very much part of that. This is a voice that wasn’t being properly heard and I like to think we helped to change that. The case for indexing is much more widely acknowledged today. You’re also a strong advocate of fixed fees for advice, as opposed to ad valorem fees. Why is that? Fundamentally it’s because, most of the time, fixed fees are a better deal for clients with larger portfolios. If your job Is to look after your clients and give them the best possible chance of success, you need to pay attention to the fees they’re paying. On average the stock market goes up more than inflation, so if your fees are linked to the return of the stock market, you will inevitably charge your clients more than if your fees are fixed, capped and linked to inflation. Yes, of course, you have overheads and you have to make a profit as a business. After all, the client needs you to have a successful, profitable business to keep looking after them. But continuing to charge your clients more and more because they've got more and more money is very hard to justify. There comes a point where you're just profit-taking from them. There's got to be a level where it's fair for the client and fair for the business. For the first few years you just had the Cheltenham office, but then you decided to launch rockwealth businesses across the country. How has that gone? It's gone really well. We’ve been going for ten years, and we'll be confirming our tenth rockwealth office later this year. All that growth has come in the last five years, so we've built it relatively quickly. But we’re not in a rush to grow. The important thing is to find the right people, who believe in the right things. We mainly cover the Cotswolds from Cheltenham, but we now have firms right across the UK, from Aberdeen in the north, to Cardiff in the West, Norwich in the east and Brighton in the south. That means that people all over the UK can now benefit from evidence-based investing, proper financial planning and fairer, fixed fees. We still have plans for expansion though. We would particularly like one or two firms in Greater London, Birmingham, Manchester and Bristol. We don’t yet have a firm covering Devon and Cornwall either, which we want to put right. What sort of advisers are you looking for to help you grow? We're looking for advisers who want to do right by their clients and have a long, ongoing relationship with them. But we also need these advisers to be entrepreneurial and willing to run their own businesses and be in control of their own destiny. We essentially help advisers to set up their own firms. We give them all the tools they need to give their clients a great financial planning experience. We give them the educational material, the software and the investment solution they need. We basically provide advisors with everything they require to keep their clients on track. We have a range of different options, depending on whether the adviser joining us is starting afresh or whether the firm is a well-established business already, or indeed somewhere in between. Because we really want to help as many people as possible, we are particularly interested in talking to firms that already have a reasonable number of clients. There’s a wave of consolidation in the financial advice sector in the UK at the moment. How is that impacting on the growth of rockwealth? Yes, it’s very interesting. We are increasingly speaking to advisers whose firms have been taken over by a consolidator, and indeed clients in the same situation. There’s a rather depressing pattern developing with consolidation. Firms are amassing huge assets under management, and clients are being shoehorned into sub-optimal investment solutions, which are usually expensive and actively managed. In many cases, they're being put in funds that suit the advice firms’ interests, not the clients’. Often the advice fees go up when a firm is taken over as well, and sometimes the level of service goes down. Clients, for example, may no longer have direct access to the adviser they’ve known for years. So I think clients are disheartened by all this, and advisers are as well. Many of the advisers we speak to don’t want to work for a firm like that. Indeed many of the advisers who’ve been moving over to rockwealth are doing so because they feel uncomfortable serving their clients under those sorts of circumstances. Finally, Tim, what is it about all you’ve achieved over the last ten years that gives you most satisfaction? I'm really, really proud of the team of advisers that we've got in the group. It’s a phenomenal collection of talented, experienced and well-qualified financial planners who have all got the best interests of their clients at heart. I'm really pleased, too, that we've been able to get the message across to lots more people about the benefits of evidence-based investing and proper financial planning. This is a collaborative effort by everyone at rockwealth, and I'm really excited about what we can achieve together over the next ten years.