The Fry Group’s origins date back to 1898 with the formation of the Income Tax Reclamation Association by Thomas Hallett Fry.
In 1926, ownership passed to Thomas’s younger brother Wilfred and became Wilfred T Fry Limited, and the company began its focus on recovering British taxes for people living overseas.
Over 70 years later, in 2001, the company opened a Singapore office under the management of Aidan Bailey and David Goodman, who flew over to manage the financial needs of local UK expats.
Bailey has since returned to Worthing, UK, to work as operations director at the company’s head office, and Goodman has moved on to head up the UK Personal Financial Planning side of things.
The Singapore office has grown significantly since opening and is now the fastest growing of the company’s nine offices, where it oversees approximately £300m of the company’s total assets under management of £1.3bn.
From an original eight staff, the office now employs 20, and general manager David Pugh says this growth is reflected in the office’s revenue, which has grown by around 400% since it opened.
Climate change
Pugh moved to his general manager role at the Singapore office in 2010.
His career in the advice industry began in his early twenties when he joined a small firm of around 10 advisers in an office on Rathbones Place in London.
Following stints at a couple of further advice firms, he was offered a role at Hargreaves Lansdown as manager of the Central London region, a positive experience he describes as a “career changer”.
After a decade at the company, a period in which he met his wife Sarah with whom he now has a son and a daughter, Pugh, who “fancied a new challenge”, was offered jobs in both South Africa and Asia.
Clearly, he chose the latter and moved in 2010.
In the Singapore office, Pugh leads a team which provides tax-led financial planning, recommending products based around the requirements of what Pugh calls the “acid test” which each product must pass.
A little TLC
“It involves TLC, which means transparency, liquidity and cost-effectiveness,” he explains. “Is it transparent? Could I explain it to my six-year-old? Is it liquid? If a client wants to sell, could I sell the investment and get the money back the next day? What are the costs? Singapore suffers from very expensive products so it’s paramount that we keep the costs down.”
He says the company works hard to build solid relationships with fund managers on its actively managed side, and gives investors the chance to meet them at client investor briefings.
Homing in
For its passive strategy, the Fry Group adopts what Pugh calls a “tactical” approach, which takes advantage of a particular area on a short-term basis.
“A good example was in June last year; we bought a Japanese ETF because we felt the market was going to take off there on the back of even more quantitative easing,” he explains.
“We were in and out within about six weeks and did quite well in terms of a short-term gain for our clients.”
The Fry Group’s average client case size sits at around £500,000, which Pugh describes as the business’s “sweet spot”.
Over the past few years, the company has worked to remove its “long tail”, which has involved removing smaller clients and small propositions with a minimum investment size of £200,000.
However, it is on larger propositions that Pugh says the business is evolving the most, as it competes increasingly with the private banks who used to dominate the upper end of the market.
“I see the Singapore market as a pyramid. At the bottom you have the expatriate-focused IFAs and at the top you have the private banks who are only interested in the really wealthy. The Fry Group sits somewhere in the middle. If someone has a million pounds they could go to a private bank or they could come to us. At that sort of level I think we can provide a much better level of service and advice.”
Simply the best
Pugh says he considers Singapore to be the best wealth management market in the world.
To illustrate his point, he compares the market to London, where he began his career in 1996: “People here have more disposable income so they accumulate their wealth a lot quicker. This means there are a lot more clients to do business. It’s a very buoyant market”.
He says that such a prosperous environment will encourage market quality to improve in the long term, with increasing numbers of clients demanding a higher class of advice, with the concept of paying for financial guidance becoming further imbued in the city-state’s culture.
His point moves onto the jurisdiction’s recent attempts at improving customer care in the wealth management industry through its Financial Advisory Industry Review (FAIR), brought in by the Monetary Authority of Singapore.
Among the most significant initiatives introduced in the review is the “balanced scorecard”, which will impose reduced commissions on advisers who have failed to ensure their clients’ interests are adequately met.
“It’s a sad state of affairs when regulation is needed to improve standards in an industry,” says Pugh. “FAIR is a good start and a step in the right direction, but it is just a step; we need a lot more, we need a big cultural shift in the way advisers are doing business and the products insurance companies are providing.”
Another stand-out proposal is “commission deferral”, which, in a similar vein to Hong Kong’s ban on Indemnity Commission, will ensure payments to an adviser are made over a period of six years or over the premium term of a policy rather than in one up-front lump sum.
Quality control
“While the deferral of commission is a good thing, it’s only on a very poor type of product, which is essentially an endowment policy. When they were banned in the UK 10 years ago, salesman came to Asia and sold them here, and they still dominate the market. Commission deferred or not, it’s still a lousy product. Similar steps could be taken to expand it across the industry.”
A much-debated issue in Singapore of late has been the quality of its advisers.
Many have argued that the minimum requirement to become an adviser in the region is inadequate, and that the profession should be viewed alongside those such as accountancy and law in terms of the level of specialism required.
Pugh agrees: “‘Adviser’ is just a word here unfortunately; anyone can call themselves an adviser after passing a couple of exams and that is categorically wrong. We need to take strides as an industry to improve professionalism. Regulation can only take us so far; we need more.”
As well as being a year for regulation, Pugh says 2015 will also be a year for growth at the Fry Group’s Singapore office.
While the company has no plans to open up any other offices, it plans to grow its team with a new compliance manager, the promotion of two paraplanners and the hiring of two paraplanners to replace them.
Pugh also considers the option of looking into new markets, in particular mentioning a move into Vietnam, being facilitated through its Singapore office.
Beyond the Brits
Perhaps most notably, Pugh says the company has considered diversifying its client base in terms of nationality, rather than focusing entirely on British expats.
“We consider ourselves a British office, we adopt the same level of compliance as the UK. We have tried to become the default choice for British expats in Singapore,” he says. “However, we have thought about looking at Australians as well, or something like that. Why not pick up the model and go and take it into a different jurisdiction. It’s something that we are currently thinking about which could happen in the future.”
