How did you get into wealth management and why did you found Killik & Co?
We have a history of stockbroking in the family. There was originally a Killik & Co founded by a distant relation of mine, Sir Stephen Killik, back in 1903. He died around the time I was born so I never met him. I quite coincidentally came into stockbroking with a firm in London around 1969. I took the training from that firm then had a word with the senior partner of Killik & Co and asked them if they wanted a Killik on board, so they took me on. I became a partner there in 1974 and then we merged with Quilter Goodison a year later in 1975. I was invited to run the Private Client Department of Quilters in ’82, which was a really interesting and exciting challenge. Thatcher of course was getting her feet under the table, so to speak, we were starting the privatisation programmes and all the things that followed after that, trying to bring newer investors to the market who’d never thought that the stock market was a place for them. I got very excited about this as a potential new market for us.
We were involved in the British Telecom privatisation in 1983 and were distributing prospectuses through Debenhams department stores, which they loved because it increased footfall. After a very successful launch of BT, we discussed with them what else we could do and we opened a first share shop in the UK inside Debenhams in Oxford Street back in 1984. That was a huge success.
We followed that by opening a number of other share shops inside Debenhams department stores around London. It really stimulated my thinking in terms of where the future of the market was going. Thatcher’s ideas were quite revolutionary. The Big Bang in ’86 effectively deregulated the stock exchange and took away some of the bias that the stock exchange had to itself for things like fixed commission rates. It encouraged private investors to come into the market and we had execution-only houses starting up in 1987. I never myself wanted to be involved in that end of the market and it was quite clear that the business that we were attracting to our share shops in Debenhams was going to migrate towards execution-only, so we came out of that.
Around that particular time too though, Quilter Goodison, as it was called at the time, was taken over by Paribas, the French bank. They couldn’t quite get my strategy of growing the business through lots of newer investors. They felt that we ought to be after the top end of the market, the very, very high net worth clients. We agreed to differ on that and I managed to extricate myself in ’88. I did a year of gardening leave, which allowed me to build the business plan of Killik & Co, and we launched in January ’89, from an old chemist shop in Chelsea.
On my first visit to America in 1973, I was staying with some friends and said, “Do you know a stockbroker I can go and have a chat to?” They put me in touch with somebody and I was blown away by the Wall Street to Main Street concept and their off-the-pavement stockbroking. It’s a principle that I’ve tried to employ as well to take away the intimidation, it was very much in the thrall of what Thatcher was trying to do.
Do you think wealth management has changed significantly over the years?
I think certainly being online has changed our industry, without a doubt. It’s taking away some of the intimidation. People are not so intimidated doing things online as they might otherwise be by writing to a full-service firm and saying, “Please send me particulars. I’d like to become a client.” That has changed the industry. But I do think that visibility is important. One of the concepts that we’ve found that works terribly well is if we can get ourselves into the local community.
We opened an office about two years ago in Northcote Road, between Wandsworth and Clapham. We decided to treat it as a laboratory to look at new ways to communicate with people; and by being local, by putting yourself out amongst the local community, we find that clients embrace us more because we are seen as a local and we take a deep interest in the local community. Not in lockdown quite obviously but in better times, we make offices available, meeting rooms available to local people for local events such as coffee mornings or PTA meetings for schools. It sets us apart. We’re building upon the lessons that we’re learning from our Northcote Road office, which in some ways were pioneered by our Hampstead Office. Peter Day’s been up there for 20 years, and he really has become a part of the community. His team has grown from managing £20 million in assets 20 years ago to £850 million today, by forming deep and lasting relationships with clients and networks in the local area.
People want to look you in the eye, and that’s still important and it always will be when it comes to people’s money.
What makes Killik different from other wealth managers?
We are one of the last remaining partnerships. Certainly in the full-service space – obviously, private equity and others have partnerships – but in our space, we are one of the very few remaining ones. That involves the business being run by its owners, and that gives a very different spin to what it is that we’re trying to do and the way that we do it. We consciously try to be different, not for difference’s sake, but because we always feel that there’s always a better way to do something. If you’re trying to be different, you’re looking for better ways, rather than just necessarily following the norm.
I learnt early on at Quilters, when I was running the Private Client Department there, as Quilters had grown very largely by consolidation, that it wasn’t the most sensible way to grow a business, in my book, because you never really own the clients; the clients were owned by the firms you took over. Years after I left, the partners from one firm were still going off for lunch together on certain days of the week. It’s very difficult to install your values into people who’ve learned other habits in other organisations.
I started very much with the idea that we’re going to train our own advisers from scratch, as I don’t want people coming in with any preconceived ideas of what the business was about, and this is what we’ve been doing. We’ve trained our investment managers ever since we started up in ’89 and now, we train up our own financial planners as well. We’ve had to take in a core of people with experience in that space quite obviously to grow the financial planning side, but we haven’t wanted anybody to come with any business as we obviously have the potential clients for them.
I’ve always had a complete fixation on the average age of clients. When I started off, the average age of my clients was around my age at the time, about 40. The personal finance editor of the Financial Times wrote a half-page piece on Killik & Co just a few weeks after we’d started trading. We’d come out with a new PEP as we’d seen an opportunity that nobody else had picked up, and he was quite generous to us in his comments. That of course started our love affair with the FT, which absolutely appealed to the market that I was after, which are essentially people who are income-rich, capital-poor but aspire to be capital-rich, and that was what I thought was a really exciting market to go after.
The average age now is 57, but we’ve launched our own robo app, Silo. We’re the only full-service firm, as far as I know, to have a robo app. The average age of our thousand or so Silo app clients is 35. That’s the next generation of clients coming through.
Do you think we’ll ever see wealth management taught in schools?
We keep pleading for that because that’s where it has to start. People are coming out of school not understanding what a yield is. Obviously, it dates me a little but my own son came out of school not knowing how to write a cheque. I had a chequebook for him, so he wrote on Please pay “Dad”. Children need to learn and understand money and what’s involved with money. We’re trying to do our bit on education. We have one of my partners full-time on education. We’ve got over 300 videos now on all sorts of subjects in finance, which are well viewed.
We’ve broken several records for ourselves in terms of viewership. That’s going quite nicely, but we recognise that, for ourselves particularly, given that we are trying to go to a newer market, it’s terribly important to take people on that journey with you and help them to understand what it is you’re doing.
It’s all well and good asking clients to give us their money to manage for them, if they choose to go on a discretionary service, but it is so much better if they can understand what it is that we’re trying to do for them. Especially if they understand some of the awful language that we’re all prone to use in this field.
What’s a typical day for you now versus when you were starting the firm? Are you still involved in everything?
Very much so. Clearly, I don’t look after clients anymore; I pass clients onto younger and livelier minds, and it’s the thing I miss most probably, in the way that my role has changed, but I’m still very heavily involved in the strategy of the business, the direction of the business, the direction of travel, the values that the business is all about.
We recently went through a whole culture exercise; it’s quite interesting to do that as an exercise. You suddenly realise you’re maybe not quite as good as you thought you were in some areas, and it’s no bad thing doing a balance sheet of that sort of approach as well.
Since you founded Killik, what’s the thing that you’re proudest of? What’s the best thing for you and your career?
That’s a really tricky one. I think the very fact that we have grown this business to seven billion of assets in just over 30 years and done so organically. We haven’t acquired other businesses; we haven’t acquired other individuals, even with business or teams with business. I’m probably most proud of that because a lot of people feel that can’t be done, but it can if you’re a little bit different and you have a different approach.
What’s the worst thing or the hardest thing been about running a business?
I don’t think there’s been a terribly bad moment throughout my experience with the business, to be perfectly honest. It’s all been upside. It’s something I’ve just enjoyed enormously, so there isn’t really a bad moment. The memory’s very good at forgetting bad times anyway. I tend to be an optimist and remember the good times rather than any of the bad times. We’ve certainly had enough bear markets in my experience in stockbroking, the biggest in ’72-’74; those are tricky things to go through, and the more recent ones, ’01-’03 and ’07-’09.
Can you remember your best investments?
There have been quite a few through my history, as you can imagine. I think the one that I’m probably most pleased with has been Amazon, which I bought in 2013, which has been a ten-bagger in seven years.
We made the decision, back in 2011 when we bought Apple as the first of the large American tech stocks, to move into that space. It was really quite interesting as we recognised that the internet made the world investible and it really wasn’t until around then that bandwidth was sufficient to allow you to get the sort of data that was circulating around middle America. We could be as well informed sitting in the middle of London as you were in any part of the United States about their securities markets. Over the last ten years, we’ve been very heavy buyers of the American market, and our clients have benefitted from that and not being too heavily exposed to the FTSE of course.
What about your worst investment?
Well there is one, of course, that goes right back to the 1970s, a company called Court Line, which as a young broker, I got rather enthusiastic with and persuaded my family to put some money into, only for the whole thing to go bust in 1974. So a salutary lesson for me at the early stages, which was no bad thing at all in that sense. But I have one member of my family who continues to remind me about it.
Is there a particular book on investing that you think everyone should read?
Well the trouble is, it’s not any longer in print; you can probably pick it up at an old book store or something like that, but there was a publication by the Investors Chronicle called Beginners Please, which was first published in the 1950s. I think even in the ‘70s, it was updated, might even have been the ‘80s, but sadly, it no longer is around. For me, that was my go-to publication when I was learning about the industry. I found it so helpful. But as I say, it’s not of much help to people today because, even if you can find a copy, everything is very out of date. However, the principles are essentially the same; they never change.
What do you think is the one mistake that investors are most guilty of making?
I would say it is following the herd in the belief that the herd knows where it’s going.
We’ve all seen that, particularly in market volatile times. You’ve got to have a long-term strategy in equity markets and buy and hold for the long term and not be actively trying to trade the market. It’s in nobody’s interests to do that. People so often try and predict that there’s going to be a bear market or that we’re in the early stages of the bear market and they liquidate large parts of their portfolio. And then of course, they miss it. It’s not just getting one decision right; you’ve got to get two right. Then getting back in again is usually at the blackest time when you think “ooh no”, and then before you know it, you’re back up above the level at which you came out. Then you don’t want to go back in again because to do so loses money.
These are the things that investors really need to learn and understand. Any number of books you read, there’s nothing like getting a personal experience of making these sort of judgements.
What’s the one bit of advice you could give to investors; do you have a golden rule for successful investing?
I think it would be that really, I’m a great fan of direct investing over fund investing. I’m not a fan of financial products per se.
There are so many very attractive companies around the world that one can happily buy and just tuck away. We’re all consumers of so many of these companies’ products and services that, generally, one has a sense of what the company does and whether one likes the product or service. To follow one’s own instincts in that regard is I think one of the ways to more sensible investing. To make your own judgements on whether you think that the company has passed its best or there are more and better opportunities out there. Always be looking for newer ideas because it causes you to filter your existing portfolio because you’ve got to find the room for the new stock and the new idea. I’m definitely a disciple of direct investment into equities for private clients. Then you can have a connection with the underlying business rather than buying a product. Although, we do sell products to clients and we research products. But the majority of our client money is directly invested.
Paul Killik is Founding Partner and SEO of Killik & Co.
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.