Rob Schwarz, chartered financial planner and founder of Finova Money, talks to Damian Fantato about launching his advice business with a subscription model.
"The three of us [Schwarz and co-founders Rob Bell and Scott Millar] worked at a firm together prior to launching our own business. That’s where we learnt to do the job of a financial planner.
"But it got to the time where we wanted to go into the big wide world and launch our own firm. But we wanted to do things a little differently.
"The financial planning we gave at the company we were at before was holistic, focused on long term objectives, matching money with purposes, using cash flow planning. And we are doing much of the same stuff now but we weren’t in a position to help a lot of younger clients or clients who didn’t have a big pot of money to invest on day one.
"For us we had stories in mind of people we hadn’t been able to work with based on that percentage fee model. That led us to that idea of creating a hybrid model. It’s a fixed fee to provide ongoing planning advice and if clients want us to manage money for us there is a smaller AUM fee.
"But we were concerned that if we do it that way, how do we justify complexity? So we build a matrix to establish how much time we will have to spend with a clent in a year. We put a client's situation through the matrix. Things that go through that are their income position, whether there’s a business interest, whether there’s complex tax advice, whether we’re advising one person or a couple. How much time we will be spending with them each year. That way we can go on a journey with them.
"That fixed fee can change year to year. For one client it might be getting them through a certain event but after you’e gone through that process, the actual complexity scales back a bit.
"There are three main groups of folks we categorised. Tier one is what we call 'foundations' which is our digital offering. That starts from £100 a month. Then we’ve got tier two, which is our core offering which is much more traditional. More in-person meetings, tax modelling, cash flow planning. That starts from £300 a month.
"Tier three is our family office offering where you’re dealing with mulitple family entities, family investment companies, education planning, trust structures. That starts at £2,500 a month. For us it is all about that wealth transfer and being that point of contact.
"Underpinning all of that is optional wealth management and if clients want us to manage investments we charge 0.25 per cent of any assets we’re managing for them.
"We decided to start as an appointed representative of the Sense network. They have been brilliant in terms of getting us up and running. We have to use Intelliflo Office as our CRM system and every decision we made really had to integrate with IO. We want to be tech enabled and we want everything to talk to each other.
