Having founded Forth Capital in Dubai in 2004, chief executive Tom Tracy has completed a virtuous circle that sees him again looking to the Persian emirate for the next chapter in the company’s growth.
Tracy was inspired by the huge opportunity in the Gulf emirate to launch Forth Capital but decided after a short period it was not the place to get a new business off the ground.
“Despite being well-travelled, Dubai in 2002 was a real eye-opener for a young financial adviser who was proud of what he did,” says Tracy.
“[After founding the company] it soon became apparent, even at that time, that the reputation advisers had in that part of the world was pretty horrific.”
Mission statement
Prior to Forth Capital’s launch, Tracy was working for Meyado, which he rates highly for its honesty, integrity and ethics.
However, he says during the five-year period in which he worked for Meyado, when he travelled extensively, he encountered many aspects of the international market he felt could be done better. It was this drive to improve on the status quo that saw him launch Forth Capital.
It was initially established in Dubai that September, but Tracy says “as a one-man band” he wasn’t going to survive in that market for long, so brought the business back to Frankfurt, a market he was more familiar with.
Within a couple months, Tracy had hired Robert Harris, a former banker with Citigroup in London, as a partner and the company began to establish itself in Europe.
“The first couple of years were about survival and building up a client base, so Robert and I were actually going out there at the time and doing the advising,” he says.
During this period, Tracy and Harris were also reviewing where to headquarter the company and, having shortlisted Singapore and Geneva, chose Geneva on the grounds that it would be an “easier entrance to market”.
With the business established, Tracy set about building a team centred around the company’s “mission statement” to bring “top tier, professional, transparent financial services to the [British] expatriate market”.
He explains the opportunity: “I believed the offshore market was really interesting, unlike the UK, which was saturated. There was a real opportunity for a company to come in and do things correctly.
“We didn’t see many companies bringing in qualified financial advisers. At the time, someone would typically leave the UK to become a financial adviser in a place like Hong Kong or Dubai.
“They would be commission only and they would receive no appointments or any real support, a lot of which still goes on today.”
To differentiate the business, Tracy began hiring qualified financial advisers from the UK, providing them with a high basic salary and offering as much back-office support as possible. All of the advisers now at Forth hold at least a UK level-four qualification and are compliant with the retail distribution review requirements.
This approach is illustrated by the company’s staff numbers now, which show there are more than twice the number of employees, 28, than advisers, 11.
Tracy also says, despite needing to build a client list quickly in the early days, Forth has never “cold called” for clients, opting to use other strategies such as investment seminars, where he felt he presented the company in a better light and attracted a higher quality of client.
Cream of the QROP
One of the first and largest opportunities Tracy says he identified in the offshore market was offering advice on international pension schemes, mainly qualifying recognised overseas pension schemes (QROPS).
“We were very quick into the QROPS market as we understood early on this was a massive opportunity for our clients. As a result we put a huge amount of business into Guernsey. The initial QROPS market there was a no-brainer.”
Tracy says this continued until HM Revenue & Customs pulled the plug on Guernsey in May 2012, putting an end to what was arguably the biggest QROPS market in the world at the time.
Forth Capital still continues to do pension and QROPS business but, says Tracy, with the wide choice of jurisdictions now available, the level of advice required has been much increased, although he adds “there are still many benefits to QROPS”.
The popularity of QROPS helped support the business through the financial crisis, which struck in 2008, four years after Forth’s creation.
Taking the helm
That same year, Tracy says things started to happen for the company, largely because he decided to take a firmer hold of the helm.
“The biggest change was when I stopped giving advice and started to work out the strategy for the company; that was when we really started to succeed. In many advisory firms the proprietor is the adviser as well. We decided to change this and when we did, that is when we started to have the most success and the company started to grow.”
With the company now well established in Europe, Tracy has begun again to look to more distant shores for opportunity.
In April last year, Forth Capital received a licence from the Confederation of Insurance Brokers, and is in the process of applying for one from the Securities and Futures Commission in Hong Kong. Tracy reveals he was recently told by Skandia that the company was its second-fastest growing new partner in the jurisdiction.
However, Hong Kong does not seem an obvious choice for a company with a European base and no existing foothold in Asia, particularly as it is perceived to be an oversaturated market.
“Everybody had been telling us ‘don’t go to Hong Kong, it’s over-brokered’,” says Tracy. “We think it’s under-brokered at the end of the market where we want to do business, where people actually need to know what they’re talking about.
“There is a huge amount of wealth in Hong Kong but the quality of advice out there, with a few exceptions, is pretty low. If we can bring some high-quality chaps into Hong Kong, we believe we can make a real impact in that market.”
Tracy explains that he is taking a new approach with his team in Hong Kong, offering just a salary with no commission. He is planning to replicate this across all his teams within the next 18 months. The team here is also all qualified up to UK level seven or equivalent.
“It is fairly unusual in the offshore market. We are taking quite a lot of risk but we think we can get the right people in,” he says.
Team Dubai
One of the teams on which Tracy will impose his commission ban will be Forth Capital’s burgeoning Dubai team. Tracy says he’s been back in the country since December this year, laying the foundations to establish the firm in the Dubai International Financial Centre (DIFC).
To support the new venture and to “prepare the company for growth”, Forth Capital recently hired former Brooks Macdonald group head of technology Matt Aylward as its chief operating officer in Dubai.
Explaining his decision to return to the emirate, Tracy says: “When I was in Dubai 10 years ago we didn’t think we could cope, but the plan was always to come back because the market there is really exciting.
However, we had to have the resources in place and 10 years ago we didn’t have the capability.”
He also makes clear there are currently no advisers at the company’s headquarters in Jumeirah Lake Towers, and that these will not be flown into the country until after Forth Capital gains its licence from the DIFC, “hopefully by year end”.
“Having analysed the market, we thought the most straightforward route through would be to place ourselves within the DIFC,” he adds.
“Also, we welcome regulation, so we feel comfortable there, and believe it will help us stand apart from the competition.”
Over the next five years, Tracy says he would like to triple the number of advisers working for Forth, with teams of 10 to 12 advisers based in Dubai, Geneva and Hong Kong serving the Middle Eastern, European and Asian markets, respectively.
