Morningstar Magazine - April/May 2018 - 70
Investors
Before Passive Was Cool
U.K. advisor Alex Riley saw where
the world was going and adopted low
fees early on.
USER PROFILE
David Brenchley
Low-cost passive investing has grown in
popularity in the United Kingdom since the Retail
Distribution Review in 2013 banned financial
advisors from accepting commissions from fund
companies. But Alex Riley was on board
the indexing bandwagon years before then.
Riley, director at Bunker Riley Financial Planning
in London, says he saw the move against
commissions coming and first dabbled in charging
some clients direct fees in 2006. This gave
him the ability to use inexpensive passive funds.
While these fees were only a small part of
the firm's revenues, it put him well ahead of the
curve in the U.K. "The writing was on the wall for
many years [before 2013]," he says.
Today, most of the funds Riley uses for clients are
passive, though he sees the differentiator
"not as passive versus active, but low cost versus
high cost. If you can find a genuinely active fund
at a good cost, then it's open to use."
Financial Planning First
At Bunker Riley, co-run with longtime friend Justin
Bunker, Riley puts financial planning first;
investment advice follows. Once he helps a client
determine his or her financial goals, he'll build the
client's core portfolio predominantly with
exchange-traded funds, while taking a satellite
approach that includes actively managed funds.
Fees, which are posted on the firm's website, are
initially based on hourly rates-a typical financial
70
Morningstar April/May 2018
review that requires three hours of research
and administration and two hours of advice costs
GBP 600. Clients are given a financial plan
and recommendation, which they are then free
to take or leave.
If clients stay on, the firm charges a fee based
on a percentage of assets under management. The
fee is capped when assets exceed GBP 3 million.
"The difference between looking after someone
with GBP 4 million and someone with GBP 3 million
is negligible," Riley says. "We think it's fair. We're
not a large wealth manager with concierge
services, so it's only right that when you get up to
a certain amount of money the fees stop."
While the core of his firm's clients is made
up of creative types-executives at television and
film companies-Riley says his approach to their
finances is straight-laced.
"We take a strategic asset-allocation approach
to client money as opposed to tactical," he says.
"We have clients who come to us who don't
understand finances and investments. Yes, it's our
responsibility to do the absolute best job
that we can do, but I don't think that involves
being too cute."
Riley and Bunker left the company to join
former colleagues who had broken away and set
up their own independent financial advisory
firm. Riley and Bunker inherited the business in the
mid-2000s, rebranding it eponymously in 2010.
While there have been some disagreements, "I can
honestly say that Justin and I have never had
an argument in 25 years," Riley says.
"We've gone from being two guys who went
down the pub on a Friday night and had
a few drinks to guys who met our current wives;
who went through each other's engagements,
weddings, having children. We've been through
that progression together."
It's a small practice. Riley and Bunker are
the firm's sole advisors. For now, it works, though
Riley says he would eventually like to grow
the business.
"We're quite happy with where we're sitting
right now," he says. "I don't want the dynamic
of our business to change so that it has
too much of an impact on what I do away from
work. I personally have a very good worklife balance."
Should the firm add a third advisor, Riley says
he would love to bring in a female planner.
"There's not enough diversity in the investment
world. I would love to be in a situation where we
had more advisors from different backgrounds."
Outside the Norm
Riley says he wants to position himself and
his practice as different. A keen fixed-gear cyclist,
Riley says he's "super active" and has completed
both the New York and Berlin marathons,
as well as a race in Croatia where competitors are
chased by a car. The race finishes once
you're caught.
More Than Partners
Based just a short walk from Buckingham
Palace, Bunker Riley "first and foremost
is Justin and Alex, who've been friends for 23
years," Riley says. The pair met in 1995
while on a graduate traineeship and worked
together as financial advisors at an insurance
company. Riley soon realized that he didn't like
selling financial products.
He likes his creative clients, most of whom
range in age from 40 to 60, because they are smart,
successful people who have little hands-on
understanding of financial management, "so they
need our help."
"I try to live a little bit vicariously through them,"
he says. "I love finance, but it can be boring.
Table of Contents for the Digital Edition of Morningstar Magazine - April/May 2018
Contents
Morningstar Magazine - April/May 2018 - Cover1
Morningstar Magazine - April/May 2018 - Cover2
Morningstar Magazine - April/May 2018 - 1
Morningstar Magazine - April/May 2018 - 2
Morningstar Magazine - April/May 2018 - Contents
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