We are delighted to be New Model Adviser's June Star Profile. Have a look at what Tim Cooper and NMA had to say about Andrew, Matt and bdb. 

 

"The death of his father at a young age had a profound effect on Andrew Brook-Dobson. It taught him a lesson he has encoded into financial planning business bdb: live for today, plan for the future. It has become his firm’s mission statement.

‘Most clients, when they join, are putting off things they want to do for a future that might not come,’ says Brook-Dobson. ‘It’s pertinent to me because my dad died at 48 following heart attacks and a heart transplant. That made me very health-conscious and incredibly focused. I don’t want to change the world, but I want to change a few people’s lives in a significant way.’

Setting up

The first step was to start using cashflow modelling system Truth for every client in 2007. Soon, bdb also introduced life planning, after Brook-Dobson became a registered life planner with the Kinder Institute, founded by life planning guru George Kinder.

Brook-Dobson, who is chartered and certified, is particularly interested in Kinder’s three-question and exploration, vision and obstacles (EVO) techniques, which help people focus achieve their innermost desires.

‘We follow the Certified Financial Planner six-stage planning process,’ says Brook-Dobson. ‘EVO became part of the first, building intimate and deeply trusting relationships quickly. It helps us make a difference in clients’ lives, not just with their money.’

He says another major benefit of Kinder’s approach is it focuses on ‘listening properly’ to people.

bdb has recently moved to a new office, which is custom designed to assist the financial and life planning processes.

This tranquil, airy space overlooks the photogenic Crimple Valley viaduct in Harrogate and has an informal feel more akin to a creative agency than a financial adviser.

Meeting rooms feature relaxed furniture, designed to help the client be more present in the meeting. Walls are ‘writable’, like a whiteboard, to assist the conversation process visually.

Yet another initiative has been to introduce a graduate scheme in 2013. It helped bdb grow to 10 staff, only two – Brook-Dobson and operations director Matt Kiddle – of which are planners.

The scheme aims to give participants what Kiddle calls an all-encompassing education, supporting them from zero knowledge to becoming chartered. But the aim is for them to become analysts – bdb’s name for paraplanners – rather than advisers.

Brook-Dobson adds: ‘We expose trainee analysts to clients early in the journey. We train them in how to build and drive a cashflow before, during and after a client meeting. And we train them in technical and soft skills.

‘But being a financial planner is a different skillset. Some firms want to grow by hiring more advisers, but nobody is world class in all the vast skills they require, such as hunting, farming and strategic planning.’

‘I miss the IFP’

bdb is an accredited financial planning firm, and Brook-Dobson was heavily involved with the Institute of Financial Planning (IFP). He was even a board director when it merged with the Chartered Institute of Securities & Investment (CISI).

‘I was one of those who decided to merge, and it wasn’t easy,’ he says. ‘We all had much affection for the IFP. However, there was a lot going on, including the threat the Financial Planning Standards Board might remove the Certified Financial Planning (CFP) license. So it was about growth of CFP numbers.

‘But, like the IFP, it seems the CISI has found it difficult to grow the UK CFP membership, which is disappointing. There’s a danger of thinking the grass is greener on the other side. But the grass is green where you water it. It’s sad, and I miss the IFP.

‘I still sit on the CISI’s ethics and integrity board, but that’s our only involvement now. Having said that, the CISI does good things in ethics, such as the ethics test for membership. With some prompting, they have also made some ethics professional development obligatory. This is important because evidence shows people do not automatically become more ethically aware with age.’

Brook-Dobson’s co-founder Tim Brear retired in 2017 to focus on his extensive charity work. After much negotiation, Brook-Dobson agreed to buy him out over five years.

‘It took a while, but we got there and we’re still friends,’ says Brook-Dobson. ‘Somebody may think the business is worth one thing. What it can afford to pay may be another. Also banks are generally not interested in lending to assist such a buyout. So we came to a mutual agreement to ensure the buyout is affordable, sits in our cashflow forecast, and doesn’t place extra strain on the business.’

Going big

bdb’s clients are mainly C-suite executives in large companies, including many top retail brands, partners in big four accountancy firms and business owners.

It developed the executive niche by targeting individuals who had a career overlap with an existing client and asking that client to introduce them.

The firm has 109 clients. It has been adding less than 10 a year for the past three years. However, it plans to accelerate that dramatically and nearly double to 200 by 2021.

Kiddle says to achieve that the firm will have to recruit one or two financial planners and grow the support team. Most new clients have come from word of mouth, but the firm has started opening new avenues by recruiting Celine Delasalle into the new position of head of communications, marketing and strategic partnerships last year.

Delasalle has been working on a corporate sponsorship programme, including with the local Institute of Directors branch; and developing seminars with other professional partners, and business owners. She also plans to start a brand ambassador programme.

The firm wants to develop closer relationships with the big four accountancies to build on bdb’s existing base of partners in those firms.

And Delasalle has been helping develop bdb’s financial education programme in schools.

‘The goal is to educate much more widely about financial planning. It’s more about life and financial well-being than money,’ she says. ‘The programme takes place in primary schools, for example, teaching about delayed gratification and how to save and develop a healthy relationship with money. It also takes place in secondary schools, where we teach steps towards financial independence.’

Kiddle says the firm tries to practice what it preaches about living life to its fullest, balancing todays with tomorrows.

Kiddle and Brook-Dobson share a passion for extreme endurance running events and ski mountaineering. Last year they completed the Lowe Alpine Mountain Marathon, a two-day event in Scotland, as a two-man team.

Brook-Dobson also practices mindful meditation daily, which helps him be more present in work and out, he says.

Reflecting once again on his father, Brook-Dobson says he wants ‘a life I don’t want a holiday from. I hate that people live for the weekend. Change your life so you love what you do Monday to Friday. ‘We want to do deliver more successful lives to more people, both to our clients and our team. These are our goals.’

The fee bit…

bdb charges 1% initial. Ongoing is 1% on the first £1.5 million; 0.75% on the next £1.5 million; and 0.5% above £3 million. In contrast to many financial planners, the percentage is calculated based on all of a client’s liquid assets, regardless of whether bdb manages the funds or not. That also therefore applies to the figures in the adjoining table.

Kiddle says: ‘That means our fee is not contingent on clients investing with us, so it deals with a conflict that most advisers still have.’

Why still use percentages then? ‘We have discussed it often,’ he says. ‘But we are not paying ourselves a renewal and calling it a fee. We still get paid from the platform, but we account for every line in our invoices. So there is absolute transparency around how much everyone in the process gets paid for what.’

The average amount of client liquid assets is just over £1 million pounds, meaning typical client pays over £10,000 a year.

For that, they receive a planning meeting with performance reporting; updated cashflow; plus ‘anything else they need’ including interim meetings.

‘They also get our investment committee, incorporating all the best new ideas we can find into portfolios,’ adds Kiddle.

bdb achieves enough diversification with Dimensional-Vanguard pairing

bdb’s investment committee meets every quarter and comprises of Brook-Dobson, Kiddle and trainee analyst Sam Hawken, as well as economists from Vanguard and Dimensional Fund Advisors.

Portfolios combine, in equal measure, the Dimensional World Allocation and Vanguard LifeStrategy multi-asset funds. ‘Although we only use two multi-asset funds, they are our portfolios. We choose what goes in, and we hold the managers to account,’ says Kiddle.

‘There is much overlap in holdings between the two, but the management and implementation are vastly different,’ he adds.

‘We like Dimensional World Allocation because it emphasises the value, small-cap, momentum, and profitability factors; and implementation methods such as patient trading. This means the manager is not a slave to tracking error and to buying and selling when companies enter or leave the index, and it can harness short-term momentum in prices.’

However, the Dimensional fund has 20% weightings to value and small-cap, which does not necessarily reflect the conviction of bdb’s investment committee,' says Kiddle. Using an index tracker like Vanguard’s lowers that exposure. Vanguard also has different methods of capturing the fixed-income asset class.

bdb’s portfolios have significantly outperformed benchmarks from Asset Risk Consultants (ARC) which is a reflection of the active discretionary fund managers universe, over seven years. Kiddle thinks this is due to higher costs and home bias among managers in the ARC benchmark.

The only year bdb portfolios underperformed ARC was 2017. That year active managers generally were more successful in beating their own benchmarks but Kiddle says this is the exception rather than the rule."

Posted by: Oliver Smith | Posted in: News