Interview with Jon Bowes, Chief Executive Officer of Lockhart Capital Management, about why he and his partners set up Lockhart, the tech they use to support the business and his firm’s ethos of being customer focussed.

Who is Lockhart?

Lockhart was founded in 2017 by five partners who had worked together at Towry and Tilney. They set up the firm to offer independent financial planning support for high net worth clients.

The firm works with about 270 clients with £550m of assets under management.

What makes Lockhart different?

• Focus on existing clients: Jon says the firm’s focus on looking after existing clients makes it different from some of the larger financial advice firms that seem more interested in new client acquisition. In fact, Jon emphasises the importance of being really careful about not taking on clients that aren’t right for the business or clients where the business isn’t right for them.
• Client focus: the firm’s founding partners are also practitioners and they are resolutely client focussed. Jon and his fellow directors were frustrated when they were working in a larger firm that seemed more focussed on supporting the share price than on great client outcomes.
• Planning and investment management: The firm offers both financial planning and discretionary investment management. “All of our clients benefit from both financial planning and discretionary investment management from us. The two work so well together as the planning outcomes will drive the optimal risk that a client should be exposed to.” Most firm’s clients are already independently wealthy or heading in that direction and so while growth is very important the focus is more about maintaining value in real terms.

“Our clients are independently wealthy so while they want to grow assets in real time we see our role as managing assets for client requirements and to maintain value in real terms.

Compliance framework

The firm is an appointed rep of Best Practice, part of Benchmark. They rely heavily on that relationship for regulatory and compliance support as well as their tech. They joined Best Practice in July 2017 and started trading a month later.

“We use Benchmark in all aspects. We’re a member of Best Practice and from that point of view that helps us to focus on our clients and avoid some of the beaurocracy that regulated firms inevitably get caught up in. Best Practice’s compliance support is excellent and means that  we don’t actually need to have direct dealing with the regulator. We have all of the backing of Benchmark and now Schroders, so it works really well for us. This is because we have the advantages of being boutique ensuring excellent and pro-active client service, whilst at the same time having the financial security provided by Schroders.

The firm also uses the tech infrastructure supplied by Benchmark and has discretionary permissions via Fusion. Alex Funk the CIO of the Schroders solutions business sits in on the firm’s Private Investment Office meetings once a quarter.

Tech infrastructure

The firm relies on the tech provided by Benchmark, including the Fusion platform, the Enable CRM and the Wealth Platform client portal.

“We use the Fusion platform for the vast majority of our AUM. This again enables us to look after our client assets in a highly efficient way. Many advisers get caught up in idea that being independent means you have to have use several different platforms. This is not correct and in fact makes life so much harder for us and our clients. Everything doesn’t always go to plan  with Fusion – but because we both have a good relationship with each other and we are very familiar with their systems any errors are dealt with and corrected extremely quickly.”

The Wealth Platform client portal is widely used by Lockhart’s clients. While the system needs to be developed further, it works for sharing information and documents with clients, including monthly fact sheets and quarterly valuations. It also works well for new clients. Lockhart share the Oxford Risk suitability tool at an early stage in our discussions with new clients and share the link through the Wealth Platform.

The firm does not take on many new clients and so is not currently focussed on digital onboarding. However, having a fully digital client platform is going to be important for the future of the business.  Jon is clear that he does not want to be sending forms to clients to fill in ahead of meetings.

“In our experience when dealing with significant sums of money – they want that interaction – our clients would think it would be strange to ask them to fill In forms online.”

Cyber – a top priority

Interoperability is the main advantage of using a closed architecture system such as that offered by Benchmark. It can also help reduce cyber risk and this is something that Jon takes really seriously.

The firm has worked with Blockphish to review all of their external tech.

“Cyber security is something we take pretty seriously. We work with a company called Blockphish and look at all outside tech we are using and ensure we are as protected as we can be.” 

Client review meetings

NextWealth research shows that financial advice firms are spending about 105 days a year per adviser preparing for review meetings. This resonates with Jon.

“When you are setting up your store and bringing on new clients – that needs to be face to face. But we need to make the review process much more efficient enabling us to deliver an ongoing service tailored to each client’s needs. The pandemic has shown us that the industry has to get better at using technology and Benchmark need to help with that. It is absolutely correct that we are able to confirm suitability on an ongoing basis but the more clients we bring on the harder it is to service them through a manual annual review process.”

The solution in Jon’s view is that all of the information about a clients assets should always be up to date and readily available in a standard format  that can be edited and fully personalised to suit the needs of individual clients.

The inefficiency around review meetings is such that it may limit Lockhart’s ability to take on new clients in the future if this could detrimentally effect our ability to look after our existing clients

Looking ahead

Jon is looking with interest at how the Fusion SIPP develops. They are cautious about being too dependent on a single provider but recognise that “having everything in one place” has its benefits. As Jon puts it:

“It is difficult to service clients if everything is all over the place. We are very focussed on the client and using their [Benchmark] technology helps us to deliver exceptional client service.  – that has got to best and the right way to do it.”