Retirementals: Matt Pitcher talks tech, consolidators and breakaways

Abraham Okusanya speaks to Matt Pitcher, Managing Partner at Altor Wealth Management, in episode 22 of Retirementals. Matt is a big technology user, having built his own CRM and he sheds light on the current financial advice market. Here’s a snapshot of some of the questions and answers featured in the episode:

How is adviser tech looking?

In FinTech at the moment, it feels like quite an exciting time. Lots of people trying different things. I don’t think all of it is going to work, to be honest. But there are lots of people trying and that’s great. That’s a great ecosystem for advisers.

How did you build your CRM?

We looked at lots of different solutions and we couldn’t find anything we could sufficiently bespoke for our clients and that we were happy with. The current provider we’re with built something for us and ‘release one’ was as good as the software we were paying huge amounts for previously. And every release that we keep pushing out, we keep upgrading, and upgrading has brought us to the point where we are now. It’s lightyears ahead of what we did have, and we’ve still got loads and loads of plans for it.

What’s the issue with consolidators?

Consolidators pay a lot of money for firms. You gain the advisers and the clients as a result, and you try to mold their proposition into your proposition. And most times, the best, most entrepreneurial, business-focused advisers will walk away. What you keep are the more average advisers and smaller clients.

The problem with a big consolidator, particularly from the firms that invest in them, is what you end up with is this ever-growing tail of unprofitable clients. And frankly, the only way they’re keeping those clients on board is by cross-subsidizing them with their bigger clients, charging the bigger clients where there is a big profit margin to be had on a percentage basis. And that’s cross-subsidizing, that’s more client base. That’s a real issue because consolidators are very often not averaging down the quality of their book all the time. And then it becomes a numbers game, so then you cut service levels because you can’t afford to service those clients profitably.

How do small to medium businesses compare to consolidators?

Small to medium-sized businesses typically take a strong team of people with a focused proposition and a fairly narrow client profile. And they are out there doing the innovative stuff, either on the investment side, or, or the planning side, or the tech side.

How do you compete with ‘big names’?

These firms can be big, but they can be big with 1000s of mid-sized clients, and it’s really simple day-to-day work involving pensions and ISAs. And the one thing that is missing is the client experience. We’ve just won a client from a much bigger firm but as an individual, he was the biggest advice, biggest client of the adviser he was dealing with. So, because we’re used to the advice needs of a client of their size, we talk their language and worry about the advice they need. We bring something that you’d have to go to the very top of the adviser base in these big firms to get to and getting to those guys is pretty impossible for most clients.

To find out more about what Matt has to say about the industry, listen to the full episode here. We’ve had many other amazing guests, see them all on the Retirementals website.

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