Sector spotlight: Financial services

Fact…

• Bristol is ranked alongside Leeds and Edinburgh as one of the UK’s major financial centres outside London.
• Of Bristol’s 430,000 population, 59,000 people work in financial services.

BIG PLAYERS

A number of major financial players have offices in Bristol, whether a regional hub or headquarters. These include Axa, Lloyds (one of the first to take up residence, in the Harbourside’s amphitheatre), Natwest/RBS and Royal Sun Alliance; international firm Deloitte provides audit, consulting, financial advisory, risk management, tax, and other services from its offices in Temple Quay.

RBS has a regional hub here and 24 million customers worldwide. Though headquartered in Edinburgh, Bristol is a major region – “we have 170,000 local customers, 746 staff in the area and we hold £3.6bn in deposits and lend a total of £2.9bn”, says Matt Hatcher, Director, NatWest Commercial Banking, West of England. “We are focused on serving our customers. In particular, we need to give something back to the loyal business community that has supported us for so long. We have injected £10m into our social enterprise fund to support hard working social enterprises with funding which they often struggle to access through banks’ lending processes.”

Hargreaves Lansdown is a home grown ‘investment supermarket’ providing tax and investment services to private investors at all levels from its Anchor Road offices. With 760,000 investing clients and 1,000 employees, the company turned over £294.2million in the last financial year (to June 2015).

“Hargreaves Lansdown is one of the largest companies in the UK, part of the FTSE 100 with a value of approaching £7 billion – that is bigger than Sainsburys,” says head of communications Danny Cox. “Over the years, financial services has been littered with complicated, overpriced products which consumers could only access by using an expensive financial adviser. HL has always wanted to do things differently.”

The company instead provides investors with information to make their own decisions and products to match. “Buying without advice is not for everyone but it is cheaper and the growing trend today is the rising numbers of clients wanting advice only when they need it.”

UK Top 10 accountancy firm, Smith & Williamson, also offers investment management and financial services, including pensions advice, to business owners, trustees, families and individuals. The firm’s Bristol office is home to around 200 people providing accountancy, tax, investment management and financial advisory services to businesses as well as private clients.

Mike Lea, managing partner of the Bristol office, says: “The market for financial services is a fiercely competitive one, particularly here in Bristol where most of the major firms are based. Against this backdrop, we are extremely pleased to have grown our loyal client base and to continue to attract talented people. As we look ahead to 2016 and beyond, we will continue to develop our services to meet the evolving and ever-more sophisticated requirements of our clients.” 

FINANCIAL PLANNING AND ADVICE

Bristol has a wide array of financial practitioners in the city offering advice on anything from workplace pensions to private investments, tax efficiency and financial streamlining. The diversity – in terms of scale, services and size – makes it impossible to cover all, but does underline Bristol’s importance within the service sector, finance being no exception.

Heather Lewis is marketing manager at Aspira, a financial planning firm specialising in business advice such as workplace pensions and wealth management. Turning over £4m annually, the team deals with clients such as Wadworths, Films@59 and Proctor + Stevenson. She says the main challenge facing clients is constantly changing regulations. “It’s getting more complicated so more people need advice. You wouldn’t service your car yourself unless you were an expert; it’s the same with your money.”

Steve Pine, partner at Aspire in Queen Square who offer personalised financial planning and investment management direct to customer, agrees: “The financial world is subject to constant change: the delay in state pension age: so called pensions freedom, buy to let stamp duty surcharge, to name just a few.”

In the year ahead, Heather believes the continued introduction of auto enrolment for workplace pensions will prove the biggest challenge for business: “every employer must enrol their eligible employees. This will roll out for small and micro companies over the coming two years, even those employing one person.” Meanwhile, the biggest industry challenge will be “the move to fees following the cessation of commission”, which means 2016 will be a year of consolidation for Aspira. “We’d expect 2017 to bring some expansion asworkplace pension scheme members will lose out on advice unless they agree to Adviser Charging – and as AE will apply to virtually all companies, there’ll be a much greater need for workplace advice – especially with the prospective hike in contribution levels.”

Newman Langley is a small start-up financial advisor serving owner/directors of SME businesses with personal and corporate financial advice, turnover initially projected at £100,000. “[Bristol] is also an innovator, a spear head for alternative funding advice and incubator for businesses with innovative thinking about financial services,” says Adam Newman, principal of the practice.

Adam traces Bristol’s role in the financial services industry: “Over the years, major employers like British Aerospace, Rolls Royce and Imperial Tobacco dramatically cut down their manufacturing centres in the 1980s, their strong local presence was replaced by a number of big financial services names. Since that period, Bristol has developed into one of the main UK financial services hubs. Bristol is seen as the engine-room of UK financial services, providing back-office solutions like administration and compliance for major UK and international institutions.” 

ALTERNATIVE FINANCE

For various reasons, traditional finance solutions are not open to everyone. Companies and individuals in Bristol are served by several alternative finance solutions. Alongside new methods such as peer-to-peer finance (a space Hargreaves Landsdown will be entering later this year) and crowdfunding, Bristol Credit Union was formed 10 years ago to help local people by providing affordable loans and competitive savings and has grown in prominence by collaborating on the Bristol Pound. “The majority of our business is personal and some business, but we’re looking to expand that,” says CEO James Berry; “we’re all about the locality, improving things for our members and their locality. Business is an important aspect of that.”

He reports £6m in savings and £3.6m in outstanding loans. In ten years the company has grown from 1,200 members and £500,000 assets to 10,500 members and £8m assets.

“The biggest route [to growth] is word of mouth,” says James, who says growth has snowballed, compounded by “a couple of macro trends. The banking crisis helped as people looked for alternatives that weren’t big banks – we’re ethical and local. A low interest rate environment too has helped make our [savings] rates more attractive.”

South West Investment Group (SWIG Finance) is a not-for-profit organisation delivering loan finance across the South West region to small and medium sized enterprises. It has been active for 27 years, setting up an office in Bristol 4 years ago and funding over 130 businesses in the city with almost £1.4m of finance.

“SWIG Finance delivers different funding streams to businesses,” says marketing manager Katie Sandow, adding that the company is also the south west delivery partner for the Government’s start-up loan scheme. “The thing that differentiates SWIG is the businesses that we help tend to have been turned down by banks.”