Planner Profile:John Neas, TOWER Financial Advisory Services
In the first of a new series of features Good Returns is profiling New Zealand financial planners and asking them how they run their business.
Wednesday, November 10th 1999, 12:00AM
John Neas, 54, came to financial planning six years ago after a career in accounting and finance including Trade Commissioner in Suva and LA, Treasurer for the Government of Niue and Corporate Treasurer for GCS Limited. He started at Tower as an adviser primarily selling Tower products and then started to develop his own financial planning practice.
Neas now spends a couple of days a week - and generates half his income - on financial planning. The rest of the time, he's a Tower adviser looking after smaller clients putting aside $100, $500 or whatever they can afford each month.
His many qualifications include a B Comm with majors in accounting and economics, CA from the Institute of Chartered Accountants and Certified Financial Planner licensed by the FPIAA. Neas made the "Top Twenty" for Tower Financial Advisory Services in 1995, '96,' 97 and '98.
Why did you choose a career in financial planning?
I had it in the back of my mind from when I was working in LA. I had had enough of working in line management and wanted to become self-employed. Tower, at that point, was about to start a financial planning service and I valued the support they offered and the good name. Tower has loosened up considerably from when I started six years ago. Although we fly the Tower banner, there is no obligation to use any of the Tower product providers. We offer a very similar service to any of the major financial planning firms.
What is your target market, and what marketing do you do?
I tend to specialise in people with large lump sums and my clients tend to be 50 plus. What we all find (in the office) is that the majority of our good clients are plus or minus five years of our own age. I market myself as being someone who's very well qualified with accounting, economics and CFP qualifications, and the fact that I've been successful as a financial planner is directly as a result of that. My marketing is mainly through newspaper advertising and referrals.
Can you describe precisely what services you offer to clients?
Financial planning, investment advice, risk management, mortgage broking and also retirement planning. I have $30 million under advisement, including financial planning clients.
And what products?
Pretty much any product which a financial planning firm would use, we use. There are very few restrictions and, where there are, they're usually from the other side saying they won't deal with us. We're always quite careful never to put too great a proportion of a client's funds into Tower products: I normally wouldn't put more than about a quarter in total into Tower funds. Recommended products are mainly unit trusts and GIFs, but also direct shares and fixed interest investments. Occasionally, I recommend UK investment trusts and some tax-paid products such as registered superannuation products and insurance bonds.
What do you think your strengths are and what value do you add for your clients?
I offer honesty, integrity, an ability to listen, attention to detail and a good understanding of what financial planning is all about. I add value to clients firstly by helping them to reduce risk by structuring a well-diversified portfolio appropriate to their needs (ie for growth or income) and risk profile. And, secondly, by taking care of everything for them. We monitor their investments for them, give them a report for tax purposes and take care of the paperwork and the worry. In some cases, I even hold the client's chequebook and write out the cheques ready for them to sign.
Is there any particular software that you use?
No, although the Prodigie programme is used to monitor and record clients' portfolios.
What about an administration system such as a master trust or wrap account?
We do use a wrap account; that's only been available in the last six months. We use Tower Trust. The advantages of the wrap account are that you can have almost anything in it and it particularly suits people with very large portfolios. Also there's the level of security, with an authorised trustee company as custodial trustees. In terms of administration, it's absolutely brilliant - it's so simple. Tower Trust fills in all the application forms, deals with the stockbrokers and so on. Fees charged are a percentage, on a tranche basis. The first $200,000 is at 1.55 per cent and it's less after that. Virtually all of my financial planning clients use this service.
What trends do you see in the industry?
Virtually all of the majors now either have a wrap account or a master trust, as far as I know. You can see that this is the way the fund managers are going, too. It's all designed to give people more choice. The days of just saying that Tower's a good name and a good manager are gone: people expect to be given a menu. They want to shop around a lot more than they used to and, of course, there's this understanding now that they really need to provide for themselves because Government support is less than it was.
Do you think the calibre of financial planners is improving?
It's still a fledgling industry when you compare it with accountants or lawyers, say. There would be very few people in it who have much more than 10 years' experience. It's a new profession. It's struggling with all the issues. There are a lot of people who have very limited qualifications and I think some of them are still trying to sell a product rather than give advice. However, there are a number of difficulties for people starting out, particularly as new graduates. You need to build up trust with your clients and often people prefer someone nearer their own age and experience. Also, I suspect that different firms have different recruiting policies, but we're all self-employed and only paid from fees and commission. When you start out, you've got no client base and no money, unless the firm puts you on salary for the start-up period.
What's your view of the FPIA? Is it raising the profile of financial planners?
The current professional body is doing virtually nothing at the moment. It's a question of public awareness in the first instance. I'd like to see some promotion of those of us who have qualified as CFPs. We've gone to a lot of trouble to be qualified and it wasn't an easy journey getting through. There are all the disciplines that we have to adhere to and there's a sort of implied guarantee that someone gets if they're dealing with a CFP. The public is well aware that lawyers, accountants and doctors have got these professional bodies and I would like to see them (the FPIA) promoting it in a similar way.
John Neas was a finalist in the 1999 Financial Planner of the Year Awards. The Awards were sponsored by Armstrong Jones, AXA New Zealand, Tower Managed Funds, Royal & SunAlliance and FAB Software.
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