Corporate finance firm First Sentinel has launched a wealth management arm headquartered in London.
The business will be run by chief executive Jonathan Hives and managing directors Ben Barratt and Toby Band. The trio have worked together for almost seven years during their time at Arlo International and DeVere Group.
First Sentinel Wealth will offer a range of financial advice services to clients across the UK, as well as high net worth private clients internationally.
Hives told International Adviser: “We have worked together for almost seven years. We had a tremendous three and a half years at Arlo International, but we have decided to have our own business and run a company how we’d like to run it.
“We know the First Sentinel Corporate Finance team well. We had some discussions which led us to becoming the appointed rep of First Sentinel Corporate Finance. First Sentinel Corporate Finance has a lot of M&A action, and also help companies that have gone from a private firm to a public firm. As those companies grow in the UK, these companies have or require pension schemes. Instead of referring these clients to a different IFA, we can now provide financial advice in-house.
“Also, they’re dealing with entrepreneurial clients. These individuals have got shares in a newly public business, leading to a wealth creation event. We’ve now got the wealth management arm to offer advice and tax planning all under one roof – which makes it a very powerful brand and business.
“On the flip side, we have some entrepreneurial clients, who actually may be relevant for the corporate finance side of the business. The synergy between the businesses is hopefully something that will continue to grow.”
UK growth
The trio are keeping their feet on the ground and are not planning an over-ambitious expansion across the UK.
Hives said: “We don’t want to be getting too far ahead of ourselves to begin with. While we’re very confident of our work, our client bank, our skill set and the potential clients, the reality is it’s more about taking on advisers that have the right work ethic and experience, and ethical mindset.
“We certainly are not closed to an acquisition spree. But for now, let’s just grow with like-minded people.”
Barratt added: “For now our focus is on building the foundations of the business and getting the right people in. This is a new business and borrowing is expensive, so perhaps in slightly further down the line it is something we will consider more seriously, but not at this stage.”
The firm may be based in London – but it will not stop the business targeting clients all across the UK.
Band said: “London is the epicentre of our offering. There are nine million people in London, and some of those people still need advice, even though there’s a lot of competition here. But likewise, we’ve got clients across the UK in the Midlands, Scotland, Chester, Leeds, and places outside of London.
“Our marketing and advertising strategy isn’t solely London-based. We’ve done a couple of years of flying here, there and everywhere all over Europe to meet clients. To take a train up north to meet a client isn’t going to stop us from getting business all over the UK.”
UK resident non-doms
One area of specialism that the advice firm will be looking at is UK resident non-domiciled clients.
Clients with non-dom status are those who live and are tax resident in the UK but have their permanent home outside the country. Those who are registered as non-domiciled with HM Revenue and Customs (HMRC) are tax resident in the UK, but do not have to pay UK tax on income and capital gains earned overseas.
Hives said: “We also believe UK resident non-domicile is a massive client area for us. I think it’s 42% of Londoners are actually non-dom. That’s a massive target market there. What we’ve found in recent times is a lot of IFAs only tend to focus on UK resident UK domicile.
“We’ve got some great tax advisers as connections within our network that will be able to help these high net worth individuals.”
Barratt added: “It is a massive opportunity to plug a hole that needs filling. I think the demand for advice is higher than it’s ever been before. The people that come over from places like Europe to the UK have the more complex situations and the bigger requirements for that kind of expertise and advice.
“We don’t feel that it’s much more complicated than your standard UK advice, but perhaps that’s just a function of the fact that we’ve been overseas. We’ve done it for ourselves as well and experienced it first-hand.
“We just see that as a big opportunity in the market, that’s not being picked up by a lot of advisers. I think, in part, that’s down to the fact that people are a little bit scared of the added complexity. But for us, the added complexity gives us the opportunity to add even more value.”
Repatriation
The firm said that its UK domestic business will be its “forte” but it does have some that “are working and living internationally”.
Another area of interest for the trio will be offering repatriation advice to UK expats looking to return back to Britain.
Band said: “We have the benefit of experience working internationally. We understand different jurisdictions, different products and the importance of not getting the restructuring done when you land in the UK, but getting it done before you arrive. Compared to a typical British IFA, they’re asleep at the wheel for repatriation.”
Hives added: “I think also what you’ve got from someone who lives and works internationally, there’s a variety of different products compared to what a UK IFA may be used to. A lot of the time when we sat down with clients, we found out that they’ve been told by a different IFA that they maybe shouldn’t have a Qrops and it needs moving back to a Sipp, or they should be surrendering that policy.
“It’s not always the case because the clients could be paying high surrender fees. In many instances, the products are absolutely fine. We understand the international products and when they need to be tweaked when clients become a UK resident. We’re very comfortable with that.”
US-connected clients
The international offering will also see First Sentinel Wealth look at clients that are connected to the United States.
These clients are sometimes overlooked due to the complexities of the US financial system.
Hives said: “I lived in the US for a couple of years. I was advising expats out in the US, so I’ve got my series 65 exam. I’d like to think I understand not only the UK pension market in the US, but also the 401K/ 403B market.
“The repatriation package to the UK can be daunting for clients. Last year, I got referred several clients from international brokers that had clients that were based in the US that then moved back to the UK. These clients have come back to the UK with a variety of US retirement plans.
“There’s not many IFAs that would know where to start with that type of advice. In addition to the financial planning, if they are a true US-connected individual, they’re still going to have filing requirements with the IRS.
“We’ve partnered up with three or four different US/UK specialist tax firms. We can focus on the financial planning to ensure it’s compliant in the eyes of the HMRC and the IRS and also introduce clients to specialist tax firms. One thing that clients don’t want to be doing is filing their own taxes in the US if they are a non-resident.
“We’ve seen some horror stories, so we always encourage clients to partner up with a highly qualified tax firm. Then, we can run the investment management side along with some of our SEC-registered partners.”
Technology
Offering the best advice is sometimes hard to do if a firm’s technological processes are not up to scratch.
In today’s tech-heavy world, advisers and clients need to be dealing with the best systems for a smooth interaction.
Barratt said: “I think from a business growth perspective, one of the key areas that we’re focused on is the technology.
“The average age of an adviser in the UK is 57 years old. I’m 29 and Toby [Band] is 28. There are a few dinosaurs in the industry that aren’t using technology to improve their offering. We’ve been working hard in the background to invest as a business to make sure that we’re improving the technology that we offer to our clients and improving that user experience effectively.
“Our primary focus is, of course, to ensure that our clients’ money is being looked after, but a close second is to provide a high-quality service that provides a transparent and streamlined experience. We can’t control whether there’s an inflation crisis or a pandemic, but we can control what we deliver in terms of user interface and how clients interact with us.
“I think [this is] something that can separate ourselves from other businesses in this industry.”
Targets
Lastly, the trio were asked whether they have set targets for the business?
Hives said: “There is not a monetary value target that we have. I guess anyone would like the sound of a £1bn ($1.11bn, €1.14bn) in AuM. But that’s not going to obviously happen overnight.
“In terms of advisers, it’s not about a number as that can be a bit dangerous because if we have a target to reach by a certain point, you could force yourself to take on the numbers to hit your target. We would much rather concentrate on the quality of the personnel that we recruit.”
