After leaving Torquil Clark, the duo initially went their separate ways. Hayden Jones moved to True Potential in 2014, and Kilkelly made the switch to English Mutual later Sanlam in 2012.
However, in January 2016 they joined forces. Hayden Kilkelly was founded as a directly authorised firm, with their existing client banks novating to the new business.
It had to be our own business, says Hayden Jones, having assessed the other options. Its the only way for Graham and I to be doing the job the way we want to, with all the bells and whistles. He adds: And Im fortunate to be working with Graham. You are, replies Kilkelly with a grin.
Becoming business owners has been a learning curve for the managers. Kilkelly says: All of a sudden weve stepped into this new area. Were employers and were directors. We have to pay corporation tax, national insurance, salaries and income tax. Then theres health and safety, human resources and Financial Conduct Authority fees.
This has been an eye-opener for Kilkelly and Hayden Jones, who admit it is easy to feel, when employed, that remuneration could be better. Kilkelly says: You realise what the business you worked for paid in overheads, and then you look back at your rate of pay and think: "that was probably fair".
He adds: You also look at a lot of the things you disagreed with as an employee and understand why they happened. As a business owner you grow up, dont you? You take things a lot more seriously.
Hayden Kilkelly charges a minimum upfront fee of 750, which may be partially or fully waived on implementation. Beyond this, the initial advice charge will vary depending on assets under advice.
The first 200,000 is charged at 1.5%, the next 200,000 is charged at 1%, and the third 200,000 is charged at 0.5%. No fee is charged on assets beyond the value of 600,000. As such, the maximum initial fee is 6,000.
Hayden Kilkelly is currently assessing its ongoing fees, and is looking to implement a financial scorecard that will minimise cross-subsidy. At present, Hayden Kilkelly has a minimum ongoing fee of 1,125 per year, and ongoing fees are fixed at 0.75%.
For this, clients receive structured reviews. These consist of an annual meeting, a lifetime planning forecast, a view of existing plans and investments, a review of attitude-to-investment risk, and income tax and inheritance tax analysis.
The firm provides advice to family and close friends free of charge. Hayden Jones and Kilkelly justify this by saying if their friends were mechanics or builders, they would expect the same treatment.
As many of Hayden Kilkellys clients were formerly with Torquil Clark, several have legacy investments held on the Standard Life platform. The firm also has a relationship with Charles Stanley, which has led to the creation of five branded HK portfolios. These carry almost 15 million of the companys total assets under advice. These portfolios cover risk ranges three to seven on the Distribution Technology scale.
Charles Stanley has active and passive ranges, but the HK portfolios are a blend of both. As such, a mixture of two Charles Stanley portfolios blend to make an HK portfolio. On the one hand its to reduce cost, but on the other its due to the debate over which is better, says Hayden Jones. You can find different investment time frames where one looks better than the other.
Of the funds in the HK portfolios, theM&G Global Dividend fund has been a particularly strong performer, beating the MSCI All Country World Index by 11% from February 2016 to January 2017. ManagerStuart Rhodes had endured a period of relatively weak performance prior to this, but his fundamental approach is now reaping rewards.
Over the same time frame, theNeptune European Opportunities fund rose by almost 50%, owing to a strong value bias and a skew away from defensive sectors. High exposure to financials, and banks in particular, had a very positive effect on returns.
Hayden Kilkelly asks clients if they have additional requests, such as ethical investments, guarantees, or smoothed investment returns. This is available at extra cost, and similarly, if low cost is a clients priority, Hayden Kilkelly will adjust its offering accordingly.
The firm uses True Potentials back-office system, with Standard Life its preferred platform due to legacy books. However, Kilkelly notes that clients can view investments whenever they want via True Potential, so platform choice is of limited significance. The HK portfolios are available on nine different platforms, and clients are welcome to use whichever they prefer.
Hayden Kilkelly uses discretionary fund managers (DFM) for some legacy clients, but is less likely to involve a DFM for new ones. It currently has assets with Redmayne-Bentley, Smith & Williamson and Sanlam.
There are two strands to Hayden Kilkellys proposition. The first is lifetime financial planning. The first thing we do is sit down with a client and see if were right for each other, says Kilkelly. Once weve done that, we talk about the future, and this is where the Tardis analogy comes in. Only then do we talk about what they have in terms of cash, investments, pensions, protection.
Then we build the plan, showing how long the capital is likely to last, considering what the client wants to do in the rest of their life. At this point, the firm looks at how it can improve the situation and perhaps leave a legacy for the clients children.
The second is the bucket list, typically introduced during the clients second meeting. It is through the bucket list that the firm wants to tackle the one day mentality that can stand in the way of a clients dreams.
One day is a dangerous phrase, remarks Kilkelly. One day often never comes. We get enormous satisfaction from giving clients the financial confidence to make their spending plans happen, and getting them to proactively work their way through their bucket lists.
After 18 months of trading, Kilkelly and Hayden Jones are getting to grips with running a business. They have sought help from other places, including business coach Andie Lawson from Prudential, who has offered strategic direction, and instruction on processes and procedures.
For further inspiration, Hayden Jones and Kilkelly sit down every three months to review their procedures, software, providers and investment managers. They also make sure they keep on top of the relevant literature. Hayden Jones is currently flicking through Traction by Gino Wickman, which offers tips on getting a grip on a business.
The firm has hired two administrators, one of whom carries out some of the lower-end paraplanning. The firm outsources to a compliance expert and a paraplanner, and also receives administrative support. The paraplanner is pivotal to our business, says Hayden Jones, who also describes his compliance expert as incredibly thorough.
He explains outsourcing has helped him see things from a different perspective. Its great to be challenged by people who arent in the business. They see things as a client might see them. Its great input.
Before concluding, it is time to ask Kilkelly and Hayden Jones to step back into the Tardis once more. What is the future of the firm? The plan, for now, is to look for new premises, which will soon be the proud home of the Tardis used for this photoshoot.
The firm will continue to build the client bank until Kilkelly and Hayden Jones, the only advisers at the firm, are at full capacity, with 125 clients each.
Word-of-mouth referrals are central to this plan, and Hayden Kilkelly has strong connections with four accountancy firms and one law firm. The accountancy referrals are typically business owners, whereas the law firm often refers from matrimonial cases. Its a brilliant type of referral, says Hayden Jones of the matrimonial work. You have to be warm, empathetic, and its all about trust.
They also plan to add an extra adviser, but only when they are unable to handle current levels of demand. As for succession planning, although neither director plans to step down in the next decade, they have both given it somethought.
If we sell the business, well make sure its to a like-minded company that will do right by our clients, and continue our processes, says Kilkelly.