Blogcast #33 Blake Reddy – Private Wealth Investor

Blake Reddy: The Privat Wealth Client Advisor For Your Future Wealth

Rebecca: Welcome to the Entrepreneurial Journey podcast , today I have Blake ready with me. Hello Blake, how are you?

Blake: Hi, Rebecca, I’m very well. Thank you for having me today.

Rebecca: Absolute pleasure. So you describe yourself as a private client wealth manager. I’m going to ask you first of all, what is one of those, and then tell me about your business.

Blake: Sure. Private client wealth manager, I guess it’s kind of in the name, but it’s a case of looking after private clients, but focusing on tax efficient savings and investments, retirement planning and pension portfolios. And it extends into things like estate planning and inheritance tax as well. So quite a broad spectrum and to get there. I suppose it also comes with planning as well, so we do a lot of financial planning to set all of that up.

Rebecca: Okay. Really important stuff. Now, lots of our audience will think I’m not rich enough to be able to have wealth planning. What would you say to that?

Blake: Yeah, I think that’s actually probably one of the biggest misconceptions and it’s certainly one of the topics that is almost always being talked about. Ultimately, I think probably everyone could do with financial planning and some sort of advice, and granted it does come at a cost, so there is a bit of a limit in terms of what you do. You are required to have to get the advice, but it’s definitely a lot less than most people think. The average person in the UK, their pension pot is around about 175,000 pounds. But equally, if you scale that back and just start looking at people that are younger and maybe even just starting out saving and investing, then we can look at portfolios that even start off at your 20,000 a pound annual ISA allowance for example. So that’s really where people initially start. And then in terms of if they do take advice, I guess there are different avenues so people can go down the robo advice where there’s no human involved. So that’s definitely the cheaper option. And then when a human gets involved such as myself, realistically, you’re probably looking at 50,000 pounds if not a little bit higher to warrant that relationship. Everybody’s different. It depends how complex things are. Also depends what the things look like in 10 years for you, are you still going to have 50,000 pounds from best or are you going to have 500,000?

Rebecca: Yeah. Okay. That’s the question on most of the entrepreneurs that we interviews lips is will I be able to sell my business and fund my retirement? That’s kind of what most people are wondering. Tell me about your business, what you do, but you’ve set a business up around this. How did that come about?

Blake: So my background started off in finance as well actually. So I initially graduated from CAS business school in London, and that was in 2012. I graduated with a master’s in banking and International finance and I went straight into investment management and I actually built a firm there with another guy who had been at Barclay’s Wealth about 10 years at the time. And together we built that firm for about seven years or so. I then actually took some time out and did a complete pivot away from finance entirely. And I was quite fortunate that Stelios, who is the founder of EasyJet, he was my mentor from business school. He went there when he was younger and every year at least when I was there, he sort of picked a couple of people to take on Days Wing essentially. So I had that connection in my pocket, always wanted to try and leverage it somehow.

And yeah, it got to that stage where I ended up pitching him a travel tech platform, something that he really liked the idea of. And he said to me that he would actually allow me to use the Easy Jet branding you would put in the initial capital. And from there I couldn’t really say no. So yeah, I did a big pivot away from finance for a few years. I did that and it was near the UK top 100 startup and we had some good investors behind us and I eventually left that into 2022.

Rebecca: Yeah, definitely. I was looking at your profile on LinkedIn and it said EasyGuide and I thought, I wonder if he had permission from Stelios to do that. He must have had the permission because yeah, it’s part of the Easy brand. What happened to that business? Is that still going or

Blake: It is still going in the background at the moment. Essentially it’s been handed over to a corporate partner that we used to work with. They had a B2B focus, easy guide was purely B2C. So they are seeing what they can do with it going forward, see if they combine their B2B expertise, but also have a consumer facing side of it as well.

Rebecca: What did stepping out of finance do you think, in terms of perspective on business?

Blake: That’s a good question. I think it was a tricky decision in the first place. I never really thought I would leave the financial services sector, but I think it was maybe a case of being perhaps even Elizabeth burnt out perhaps. I think trying to build a firm, a small firm in that space is tough, and then dealing with the financial markets on a almost hourly basis is also quite tough. That combined with dealing with private clients, I think maybe I just needed a bit of a break from it as well. So I think that might’ve been part of the reason why I was keen to look at other opportunities elsewhere as well.

Rebecca: Yeah. Did it give you the refresh restart button you needed, do you think

Blake: To enter the travel startup? I did really jump straight between the two, so there was no real break in between them, although the roles were completely different. Starting the travel tech platform initially it was all about putting the team together, making sure we had the right tech people behind us to actually build the platform correctly, talking to people in the travel sector to get their products onto the platform at the same time and then not too far in the distant future. We ended up bumping into Covid, so that brought us into a number of new conversations and headaches, which I had never faced before, which none of us really had no. So we had to adapt a lot there, but it was an interesting time for the business.

Rebecca: Yeah, okay. Are you glad you’re back in finance?

Blake: I think so, yeah, definitely.

Rebecca: It’s your natural home.

Blake: Yeah, as I say, I think it was where I always imagined myself being and not being there for a few years was an interesting experience, but not sort of where I wanted to be forever. So yeah, glad to be back and glad to be dealing with private clients again.

Rebecca: Yeah, okay. So they’re not so bad after all.

Blake: No, I think I do enjoy them. I think it can give you a bit of a hard time, but I think that’s what makes it enjoyable.

Rebecca: Yeah. You did manage to miss out on one of the biggest shocks to the markets ever during Covid, so you managed to be out of finance and investments. Would that happened?

Blake: That’s true. There would’ve been a few headaches there as well, I’m sure. Yeah,

Rebecca: Definitely. I remember I’ve got an ISA and I remember my IFA going, don’t panic. I went, I’m not, it’s fine. I’m in this for the long term. She said, the markets have dropped significantly. I went, yes, they will come back though. So I’m not worried at all. Yeah, if I was about to retire during that period, I might’ve been worried. But yeah, I’ve still got a while to go. I just read a post on LinkedIn that you posted, and again, I really want to highlight this for people because I’m passionate about people investing even a tiny amount, even 50 quid a month from the minute you start earning. I think we have in the UK, I dunno what it’s like elsewhere in the world, but we have this ISA system, which is a really tax efficient way of saving, and I think if you start early, then you can build up real wealth into your forties, into your fifties. Now you posted something absolutely fascinating about the way the increase in the stock exchange, the FTSE 100 is reported and that reporters forget to include the dividend element of holding onto stocks and shares. Can you just talk us through that? I think it’s something a lot of people miss.

Blake: Yeah, I think it’s an easy misconception that the post you’re referring to is talking about the FTSE100, which is the UK’s main stock market. At first glance, it’s trading just below 8,000 at the moment, and for the last number of years it’s been around 6,000, 7,000. So first glance, it looks as though it hasn’t really kept up with other Western stock markets, especially the US stock market, but it’s actually more because of the way it’s reported, which is it is reported by its price and the price changes on a daily basis of course, but it also changes because a number of the stocks are paying out dividends when a company pays out dividends, the share price forms by the amount that is paid out. And in the same sense, the index, the 5,100 also falls by that. So people need to consider the fact if they are looking at the 5,100, whether they think it’s a good investment or not, they should really be looking at what’s called the fair value. And that includes the payouts of dividends as well. So even though the 5,100 is currently getting close to 8,000, the reality is if you did include the dividends, it’ll be over 30,000 at the moment. So it would’ve done well. It has done incredibly well. But yeah, at first glance, it looks as though it hasn’t really moved that much over a number of years, but natural fact, it certainly has.

Rebecca: And those dividends get added back into your portfolio, don’t they?

Blake: You can choose, but yeah, typically it’s a case of those dividends get added to your portfolio, so your funds grow at a faster pace

Rebecca: And the magic of compound interest begins to take place. And if anybody wants to know anything about that, there’s a great little book called The Compound Effect that explains it in very, very simple terms. It’ll take ’em about two hours to read it, and if you keep reinvesting the dividends you make, you end up with way more money than your original investment. And I think this is what a lot of people don’t understand about what’s happening with their pension, what’s happening with ISIS and that kind of thing.

If somebody was running their own business and building the business, obviously they’re putting everything they’ve got into that business, and I realise you can’t provide specific financial advice, but generally what kind of general themes, I meet so many entrepreneurs who go, oh, I’ve not been able to save from a pension because I’ve been running the business. What kind of general tips would you give people in that situation?

Blake: Yeah, I think you touched upon it a moment ago in terms of it’s really a case of just starting as early as possible, even if it’s a case of investing 50 pounds a month, putting away anything as soon as possible, that’s the most valuable part of what we do. We provide what’s called cashflow modelling for individuals and private clients. Cashflow modelling essentially shows you on the nice graph, if you did put away 50 pounds a month for the next 30 years, what are you ending up with on that date? And whenever you see these charts, it is a case of it’s quite slow at the beginning. You do get that classic hockey stick curve at the end. So just as many entrepreneurs put into their pitch decks, it’s the same with your savings and investment portfolio too. The reason being is the compounding effect that you mentioned.

So people are almost a little bit in disbelief that such a small amount can evolve into such a large number. And that’s because if you do do it early enough, the last 10 years, for example, you’ll be earning such a great return on that entire portfolio versus what you put in. And that’s where the real difference comes in. So yeah, my advice to entrepreneurs and business owners, even though you’re probably, if you’re at the start, you are maybe struggling a little maybe with the finances, but I think if you really do look at the numbers and your personal finances, there’s probably enough to put something away. So yeah, see what that number is. I’m sure it’s more than zero. So yeah, I think put something, whatever you can. Oh, each month.

Rebecca: Yeah, yeah, absolutely. I wish I’d have known in my early twenties about investments. I did some small savings. I didn’t really take them seriously enough. And speaking to your point, I didn’t really believe they would end up doing anything, and I wish I’d have known then what I know now. So my two older kids in front of my three kids, I’ve said to them, look, just put money away now. It doesn’t matter how little it is, just put it away because believe me, later, it pays off. And in the UK, our state pension system, I don’t think going to be there forever. And I think a lot of people, well, we have compulsory pension contributions now from your employers, which is great. That’s fantastic. But I think people are going to have to look after themselves. Definitely. Is it ever too late to start investing Blake, do you think?

Blake: Definitely not. No. It’s never too late. I would say it probably makes things harder for you. So again, sort of start sooner rather than later speaking to your children, for example, as you do. I think that’s a great place to start. You mentioned ISAs as well, so there are junior ices, so you can start far earlier and you can even set up pensions basically from the day someone’s born. So yeah, you can start as early as that. And in terms of is there a time to sort of think it’s too late then? Definitely not. No. I think you just need to get that conversation started, see what you can do to catch up. It might mean you’re tightening your belt a bit for more money away than others as a result of starting later. But yeah, you’ve just got the start, really.

Rebecca: Yeah, yeah, you do. How’s your business going? What’s happening with it?

Blake: So it’s recently launched. It was actually meant to launch towards the end of last year. So there’s been a three month-ish delay. So yeah, there’s been ample time to lay the groundworks equally. It’s similar to my first business in the investment management space. So there’s a lot of crossovers there in terms of what I’m used to and what I know how to do. So on that side of things, it wasn’t the case of me having to learn a huge amount to start. It was just a case of getting the right foundations in place. And then it’s just a case of finding prospects, working with my personal network as well as my professional network, and ensuring that there is a good lead flow, essentially of perspective clients coming through, which is what we have coming through at the moment.

Rebecca: And is it just you or do you have a team?

Blake: So I actually work under the name of Fountain Wealth Management at the moment. Within that, there are other advisors as well. I believe at the moment it’s around about 150 million pounds of assets under management. So not a huge amount by any means. Obviously these firms go into billions. They do. So yeah, that’s a very small amount. But yeah, it’s really a focus on growth this year and seeing just how high we can get that number whilst, of course, delivering great service for each of our clients.

Rebecca: And are your clients all over the UK or where are you based?

Blake: So based in London, but yeah, certainly look after clients all over the place. I think one of the outcomes of the pandemic was the people, no matter their age, have become quite accustomed to working online, doing Zoom calls. And people also appreciate the convenience of it too. Typically, if I had to go and meet someone, if they wanted me to come to their home and talk to ’em there, or if they wanted to come to the office in London, that could mean maybe an hour of travelling there, hour travelling back in a one hour meeting. So three hours out of the day to conduct a one hour meeting. Whereas on Zoom, we can fit the one hour meeting in so much simpler. Someone can be at their office, they could do in their lunch break just after work. It makes it much simpler for us to book in meetings now. So a lot of that is virtual, and that means we can speak to people all over the country, albeit if people do want to speak in person, then we are of course happy to make that effort too.

Rebecca: Yeah, definitely. Now, what’s your opinion on crypto?

Blake: I’ve got to ask you one crypto. Gosh, I must admit, crypto has always been a headache for me. It is something that it wasn’t something I heard about until it became relatively mainstream. It wasn’t something I was involved in at the beginning at all. So for me, I think I’ve always had the idea, I like to buy things when they look as though they’re good value and they’ve perhaps fallen back quite away, or we’re catching them at an early stage in their growth cycle. And for me, I’ve always thought of crypto as being quite expensive. There’s no real fundamental asset class behind it, so it’s hard to argue what the true value is. And I think over the years it seemed to be just a very speculative asset class, something that arguably is okay for a very small amount of your portfolio, maybe be 1%. But I don’t think more than that. I think it is very speculative. If somebody wants to be in that space, then that’s fine, of course. But I think for most people, yeah, it’s a very high risk asset class that you need to be get from it.

Rebecca: It’s so volatile.

Blake: Incredibly. Yeah,

Rebecca: It’s incredibly volatile. And for me it was, well, what’s behind it when you’re investing in stocks and shares, there’s a company behind it, there’s people behind it, there’s machinery, there’s products, there’s services, there are tangible things behind it. And I don’t know, you may invest in rare minerals or you may invest in gold, but there’s something physical there. For me, crypto was like, well, it was like the NFTs. Well, there’s nothing there.

Blake: And we still have the NFTs turned down. So

Rebecca: That’s some people who spent millions on something that they could screenshot. Probably feeling a bit daft now,

Blake: You would think so.

Rebecca: I know I didn’t get it at all. I actually made a couple of my own NFTs to see what would happen. Precisely. Nothing happened, and basically I’ve still have the original image in my photos on my phone. I went, well, that’s all it was. It was just

Blake: A lot of hype,

Rebecca: Huge amount of hype. It’s like the emperors new clothes, isn’t it? People suddenly go, oh, this is the new big thing. And it’s really not. Now crypto seems to have stuck around much longer than I thought it would, and I’m going to be really cynical here, Blake, and I suspect it’s because a lot of criminal activity is done through crypto and stuff on the dark web uses crypto, which gives it a bad rap. But I think that’s probably why it stuck around, to be honest,

Blake: Potentially. I think that because of that hype as well, there’s a lot of people that do buy into hype alone, and ultimately if there’s enough people doing that consistently, it’s going to stick around one way or another. I think when we say crypto as well, typically people are talking about Bitcoin more than anything. So it’s also important to recognise Bitcoin is one of many coins out there, and there have been many, many coins that haven’t lasted at all. So granted, Bitcoin has done but many haven’t.

Rebecca: Yeah, yeah. I don’t think Tesla accepts it anymore as a payment method. It used to, didn’t it? I don’t think it does anymore.

Blake: Yeah, he put in a fair amount into it and then quite quickly took it back out. Yeah, I don’t think they do anymore, but that would’ve been interesting to see happen. Yeah.

Rebecca: Yeah. Again, the cynic in May thought, so Elon buys a load, the price goes up, and then he sells ’em at the top of the price.

Blake: Interesting.

Rebecca: Only one winner in that scenario, isn’t there?

Blake: Yeah, he’s been told off a few times now for things like that, hasn’t he? So

Rebecca: Yeah, I

Blake: Think that’s a fair comment.

Rebecca: Yeah. Where are you taking your business? What are the plans for it?

Blake: So I have high plans for this business. I want to be hiring a number of advisors alongside me to help grow it, and I want to do that organically, but also through the acquisition of other wealth management firms as well. So as with many companies, there are two ways either grow organically or you can go and acquire other firms. And in this business, it’s quite six segmented in the sense that many firms are run by one individual. That individual at some point probably wants to retire. When they want to retire, they need to sell their company essentially. That’s what they need to do. So the average age of an advisor in the UK, it’s a lot older than most industries. So people approaching with time is very common in this sector. And for myself, I’m a long way from retirement, so I’m quite keen to scoop up those businesses as they want to exit, combine them together, and then grow through acquisitions as well. I think that’s an interesting way to build the firm as well as doing organically at the same time.

Rebecca: Yeah, that’s really interesting. I mean, that happened a number of years ago with the funeral sector. It’s happening with a lot of small accounting firms. It’s happened with small law firms. These fragmented sectors are really ripe, as you rightly say, for people coming up to retirement and go, well, I’ve built something here. Who’s going to buy it and give me the retirement I’ve earned and look forward to? And so yeah, it is absolutely ripe for that. It really is. Will you do that with the backing of investment or just as you go along?

Blake: So it would be probably finance through debt rather than any sort of equity investments like that. So private equity, they’re a big player in this space now. They have created very large firms where they’ve put all the money in and they’re consolidating many small firms into them. So that’s a big way for people to do it. For myself, yeah, it’d probably be a case of financing through debt and then combining the firms that way. And I think you do get a very good return on that investment, and I don’t think you need to be giving away equity to refinance that acquisition.

Rebecca: Yeah. Yeah, I would agree. The other aspect I look at when those big organisations swoop in and soak up all the little ones is what happens to the culture? I’m going to say that because that’s my bread and butter in terms of consulting and coaching, but I’ve spoken to people who’ve been in the organisation that has been Hoovered up, has been acquired, and there’s very little attention paid to the culture across the business. It seemed to be very spreadsheet driven, which you can understand if there are external investors involved, but I suspect your way will take more care of the culture and be more aware of that. Is that something you thought about as you grow the business?

Blake: Yeah, absolutely. I think, I guess there’s a slight difference there with the private equity firms is that they’re trying to scale to a huge extent. They’re looking to buy up a hundred million pound firms and billion pound client basis again and again and again. For me, that would be a smaller scale. I would look to buy 10 million pound client books, for example, and grow that way, potentially larger of course, as well, but not to the extent of buying a billion pound book, for example. So I think it would be easier to combine these firms whilst managing the issues with culture. I think, yeah, combining a few smaller firms versus larger firms, there’s an aesthetic there. It’s certainly something that I am conscious of, haven’t actually had experience of combining cultures into one, so it will be a first for me. But yeah, I look forward to that challenge.

Rebecca: Come and talk to me.

Come and talk to me before you do it. I’ll point out though the pitfalls. I was speaking to a very large law firm last year, and the managing partner said, we acquired somebody 10, 8, 10 years ago, and he said, the culture still isn’t right. We didn’t pay attention to the culture. It’s still not right. It’s still us and them. It still causes us problems. I’ve had conversations with m and a experts who say the profitability of these two companies could be so much more if they paid attention to the culture, and they got that right. And I’ve said, well, a lot of business owners think it’s a fluffy nice thing to have and it’s an extra, but actually I believe it’s integral to the success and profitability of most companies. But I would, wouldn’t I

Blake: A hundred percent. I think with that in mind, the first part for me is building the initial framework of how business is conducted, making sure that people know what that framework looks like and ensuring that everyone rights at the top is sort of conducting business in that manner.

Rebecca: Yeah, absolutely. Absolutely. Fabulous. So if your business had a personality or a character, either, who would it be or how would you describe the characteristics?

Blake: Putting me on the spot there, and I’m going to throw it out there and I’m going to just sort of say NASA, if that works. I say NASA just very randomly there, just because I imagine there’s a lot of development behind the scenes. There’s one mission in mind at any one time really, and there’s a lot of people working to make that happen. And combining all of those small parts to get there. In the same sense, I feel as though that’s what our business is there to do as well. We’re looking to build strong foundations, provide the solutions for our clients to achieve something in the future that is hard to achieve, but definitely attainable.

Rebecca: I like that. We’ve never had NASA before. That is a first, which is good. And here’s my final question. It’s a new one I’ve chucked in recent months, and it’s about your purpose, your destiny. What do you think drives you to do this? Blake, clearly a bright guy, you could have done anything at university, but there’s something there that drives you to do this. What do you think it is

Blake: In terms of the entrepreneur side?

Rebecca: Well, probably the entrepreneur, but more specifically this financey bit, because you went away, you’ve come back, you studied it. There’s clearly something in there that drives you and fulfils you in Maslow’s hierarchy of need that what is it about that that keeps you going in this sector?

Blake: Interesting. Well, when I was growing up, I did actually want to be an architect. So I think there is a level of creativity in there somewhere. I think people typically don’t associate finance with creativity, but I think it’s still there somewhere. So I think I’ve got that fulfilled. And then I think the reality for me is I like numbers. I’m good with numbers, and I enjoy dealing with private clients at the same time. So for me, it is the right combination of the two. I certainly, yeah, I say I enjoy the numbers. I enjoy working with funds and stocks and charts, all of that sort of stuff. If I just had to do that, I think I would struggle. But I say I like dealing with the private clients. So when there’s that human element every day, the relationships that I get to build over time and seeing how those relationships evolve over the years as well. I think that’s the combination. Highlight myself.

Rebecca: Oh, right, okay. I love that. I love that. So you’re growing things, you’re using your creative side and you’re using the numbers to do that. Yeah. Fabulous. That’s a great place to end. Thank you so much for your time, Blake, and best of luck with your business.

Blake: My pleasure. Thank you, Rebecca. It’s been great to speak to you.