Chase de Vere is preparing itself for expansion into the uncharted waters of stakeholder pensions. W...
Chase de Vere is preparing itself for expansion into the uncharted waters of stakeholder pensions.
While many large and successful intermediary firms quickly develop a taste for a new business direction, often as a product provider, Chase has no intention of taking itself away from its intermediary origins. Instead it is looking to broaden the scope of its existing business, in particular towards stakeholder and implementing new technologies.
Nigel Mitchell, managing director at Chase de Vere, said: "We have never seen ourselves as fund managers or quasi-fund managers, and we won't be going down that route. Our job as an IFA is to work with a client to get their asset allocation right and get their portfolio to match their objectives."
Over the past few years Chase has increasingly built its brand among consumers through a number of different strategies, including its Pep Best Buy guides. The group has also adopted a number of distribution methods as a way of obtaining and communicating with its clients, including direct marketing, client services call centre, and adviser services.
Chase de Vere's client base varies across the group's distribution channels. Direct marketing and the call centre has created a database of 350,000 names, of which 70,000 Chase de Vere count as clients. This area is most successful with older clients. Mass affluent younger clients, with investable assets of between £50,000 and £150,000 tend to favour face to face adviser contact.
Chase is now considering a fourth channel through expansion in its internet services. It hopes this will allow it to move outside its traditional core market of the younger affluent and older retired or near-retiring client.
Opening up a new market for stakeholder would mark a significant departure for the business. Mitchell said: "We see ourselves very much as an investment-oriented IFA and if you look at our business profile against other intermediaries you will see that we carry out a limited amount of life and pensions business compared to most. That said we are a full service IFA and there is no question that when we meet a client we are there to deal with their full financial planning."
Chase is confident it can expand into the stakeholder market as a distribution force to be reckoned with because of its past experience in direct marketing.
Mitchell said: "Stakeholder is a great opportunity for us to be able to apply our direct marketing skills to this kind of product area. It will involve a different category of client, but we also see it as an opportunity to work with employers as well and to provide advice on those schemes."
The group's internet development will be a part of this although technology will be harnessed across Chase's other distribution channels as well.
Mitchell said the IFA industry has yet come to terms with the internet and there is a core misunderstanding of clients' online needs and the strategies necessary to exploit them.
He said: "It won't be all about price. I can't believe that those of us who like being online will only purchase on price. The key thing is that the more information there is out there, the more people will want advice. When they are online many people really want somebody to guide them and our business is giving that advice."
Graham Hooper, Chase de Vere's investment director, echoes Mitchell's words, but said marketing stakeholder will involve moving outside the current database that the group possesses. Neither he nor Mitchell were prepared to discuss their stakeholder strategy going forward.
According to Chase many IFAs are disregarding stakeholder as it appears to squeeze margins but Mitchell said scale will be the important element, and direct marketing makes that possible.
In addition the group is confident technology development will allow it to strip out costs by reducing paperwork.
Another product area Mitchell and Hooper see as an important part of Chase de Vere's future business is long term care provision. Both consider it an undeveloped market among IFAs, and one which given the 50 plus average age of Chase de Vere's core client base it has a ready made demand for.
As expansion and development costs money Chase is on the look out for a significant other rather than a stock market quote as it plans its business expansion.
The IFA group's search for a buyer is in part about releasing value to existing shareholders but it is also looking for some one prepared to make a significant investment in the business.
At present 100% of the ordinary shares are in the hands of chairman Mike Edge, although other members have share options. The decision to look for a buyer follows a strategic review carried out by KPMG last year.
Mitchell said: "Because the sale is not a float there will be no injection of cash into the business from it but we would anticipate that any new owner would want to invest in the company."
Launched back in 1981 with four founder members, the group has grown considerably since then. In 1999 it had around £1bn in client assets and expects to have £1.4bn by the end of 2000, with turnover rising from £22.2m to £29m. Mitchell estimates if quoted, the group would have a market cap in excess of £100m, the amount Bradford & Bingley paid for John Charcol.
He said: "We are bigger and more profitable than John Charcol."
Change and growth in Chase de Vere has been driven by a number of factors according to Mitchell.
He cited incentive schemes that maintain an unusually high staff retention rate, the relative youth of employees, with an average age around 30 compared to an IFA industry standard of 51, and the recent creation of administration, adviser and marketing management teams last year to spread the ownership of ideas and policy creation.
As the group looks to expand in the UK it is ignoring any possible European