Riding the wave beyond cities
Stephen Collins of Melbourne’s Escala Partners says holiday and lifestyle destination Byron Bay encapsulates where his industry is heading.
Byron Bay may not seem an obvious place for a low-key financial adviser to find plenty of business, but Stephen Collins of Melbourne’s Escala Partners says the northern NSW holiday and lifestyle destination encapsulates where his industry is heading.
Collins usually deals with clients who have funds or assets of $3m to $15m. Many will have sold businesses in recent years, turning decades of hard work into a significant amount of money they now want to invest across several asset classes.
Increasingly, Collins has noted many more clients requiring exposure to environmental, social and governance focused investments. Hence the trips to Byron Bay.
“My colleague Mason Allamby and I have invested a lot of time in the Byron Bay region and there is a strong ethical bent up there, in particular the E part of ESG. So we are building that ESG expertise,” Collins tells The Deal.
“ESG is part of this new world we are operating in. If you don’t have an ESG offering — across all asset classes — then, as a firm, you are well behind the curve. ESG investing was less front of mind two or three years ago but it is very important to investors today.”
Collins is one of Escala’s founders, helping establish the firm in 2013 with a group of former UBS advisers. He had worked his way up through the ranks at UBS after starting his working career at the family economic consultancy firm, where he dealt with big clients in the transport industry.
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Escala was a pioneer in employing staff on a remuneration structure that is not linked to the amount of revenue an individual adviser makes. A straight salary is paid instead, along with applicable bonuses.
The firm manages more than $6bn for wealthy individuals and families and non-profit organisations, and Collins says the firm still has ambitious expansion plans even during a COVID-19 pandemic that has had many of the staff working from home.
Escala is hiring in Melbourne and has doubled its floor space at its swanky top end of Collins Street headquarters. It has an office in Sydney about the same size and will open in Brisbane later in the year.
But that expansion comes with little advertising or flashy campaigns, Collins is keen to stress. Instead, the business is built from word-of-mouth referrals from existing clients.
“In many respects, if we do a great job for our existing client base then your marketing is taken care of,” he says. “Unlike many of our competitors, we are purely in the business of wealth management; clients have no exposure to our balance sheet and we don’t manufacture products for distribution.”
The expansion plans also come at a time of flux for the wealth management sector, which Collins says presents an opportunity for Escala with many advisers quitting as the big institutions leave the industry.
He admits the coronavirus pandemic was a shock and the volume of conversations with clients increased markedly in the early days of the shutdown. He remembers hitting the phones and having dozens of chats with clients who wanted to know what to do and where the market was heading.
Collins says many have been through market downturns before, remembering the boom and bust days of the early 2000s and even before. He has been buoyed by the market bouncing back, and sees more opportunities.
“I’m an unashamed optimist at heart and I think this market has momentum,” he says.
“The return on cash at the moment is zero and term deposits are not much better. Bonds are overvalued, and from an equity yield to bond yield perspective, you could argue that the market offers decent value.
“I don’t think what we are seeing is a fundamental restructure of the market. It is a virus and history shows that viruses eventually go away. Moreover, many investors are as bearish as ever, which can often be a huge contrarian signal.”