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We’re trying to make sure that what we say aligns exactly with what we do

Author: Peter Birch, CFO at AJ Bel

Published: 03 Apr 2024

Peter Birch is CFO at AJ Bell, and was previously a Partner at Deloitte. Here, he talks about how you can embed purpose in your organisation by starting at the top, and shares his thoughts on how to address the issue of the financial advice gap through enhanced guidance.
Peter Birch
Peter Birch, CFO, AJ Bell

How do you embed purpose throughout your organisation?

We’ve got something we call the AJ Bell Way, which starts with our purpose and goes on to involve our guiding principles. It centres around our three key stakeholders — our people, our customers, and our shareholders — and each of these is then linked to our key value drivers with Management Information connected to them. Crucially, the objectives of our executive directors are tied to the AJ Bell Way and therefore how well they deliver for our stakeholders. So, we’ve got something that is truly end-to-end and is embedded from right at the very top of the organisation. From my experience it has to be that way if a business is going to deliver its purpose — I’ve seen many occasions where that embedding is absent in organisations and over time stakeholders or purpose can slide down priority lists. If the way your executive team defines a successful year for them is linked to delivering on purpose, then you don’t run into that problem and it’s always front of mind.

We’ve recently refreshed our guiding principles whilst also implementing the Consumer Duty, and we’ve taken the opportunity to align the two. This enables us to demonstrate our culture and core values through delivering on the Consumer Duty, and also means that our Consumer Duty dashboard doubles up in giving a useful insight into our culture. We’ve engaged a third party to help us with the re-fresh and they reached out to our people to assess the extent to which they feel able to demonstrate our principles as they go about their day-to-day. Ultimately, we’re trying to make sure that what we say aligns exactly with what we do — and where it doesn’t, we’ll do something about it so that it does.

We’re trying to make sure that what we say aligns exactly with what we do — and where it doesn’t, we’ll do something about it so that it does.

Which societal or economic issues keep you awake at night?

Thinking back to why we exist today as an organisation, we want people to invest — but why is that? Well, there is a £3tn savings and pensions gap in the UK, and there is a notably high delta between expected standard of living in retirement and how affordable that lifestyle actually is for most people. On top of that, we’ve got an ageing population and a shrinking tax base which makes things more complicated again. As part of our strategy, we analyse income deciles in the UK and the story over the last ten to fifteen years has been one of polarisation driven by austerity, the pandemic, and the cost of living crisis, all of which have served to widen the gap between the haves and have-nots. What really worries me is that, if you think forward to a world in fifteen years’ time where this hasn’t been addressed, we are going to have a huge number of disgruntled people in society and there could be some challenging consequences.

Unfortunately, as a single business in the UK we can’t fix all of that — serious government policy is needed to address inequality with a greater emphasis on social mobility and education as a key driver of it. What we can do, however, is make saving as cheap and easy as possible so that people can benefit themselves over time. Even if they’re only saving small amounts, it all adds up at the end of the day, and compounding can have a large impact for many people.

We can also make sure that our customers have all the information and support that they need to make their own decisions. We now make our Shares magazine available to all of our customers and we’ve recently launched Dodl, with a streamlined and simplified investment universe, which offers customers a thematic journey that takes into account their values and risk tolerance whilst making the world of investing — which can seem scary and complicated — much easier to understand and engage with.

What are the blockers to businesses doing more in this space?

Ultimately, we would love to be able to do more to address the gap in financial advice. Our current state of affairs is one where only the top few income deciles have enough money to afford and attract the services of a financial advisor, whilst it’s not economically viable for advisors to service the majority of people, is an issue. There have been some attempts to address this, such as the FCA’s proposal around simplified advice, but none of them have really delivered what we’d like to see.

We would love to be able to do more to address the gap in financial advice.

We think the answer lies in a form of enhanced guidance, in which businesses like ours can help the customer to assess their risk profiles and goals, and give them the tools and information they need to make a decision. Unfortunately, we aren’t regulated to do that so we can’t touch it at the moment — I think one of the main blockers in addressing this is ultimately a regulatory one. The FCA is now engaging in this topic and we’re hopeful that we’ll see some progress. There is a role for the industry to prove that the idea can work, with some thoughtful analysis, which could be a helpful resource and starting point for a resource-constrained regulator.

Reflecting on your career to date, what are you most proud of?

The things I’m most proud of are the occasions when I’ve felt most out of my comfort zone but found a way to deliver and succeed. There have been a few such occasions but the one that stands out is being asked to be an expert witness in a high court case — being grilled by a barrister in a courtroom was quite an experience! On a more personal note, as I said earlier I’m passionate about social mobility and the role that education plays in enabling it. At Deloitte, I led the relationship with IntoUniversity, a charity that supports children from disadvantaged backgrounds to obtain educational support, and we won the Business Charity Awards' Professional Services Partnership Award in 2020. I’m especially proud of my role in that partnership as I feel very keenly that we had a real impact in helping kids have a brighter future.

The things I’m most proud of are the occasions when I’ve felt most out of my comfort zone but found a way to deliver and succeed.

If you could give one challenge to your peers, what would it be?

In terms of the role of CFOs in creating a fairer future, I think there’s often pressure on CFOs to focus on the short-term numbers but it’s often more important to think about whether or not the financial model and underlying operating plan are conducive to delivering in the long-term for each of your stakeholder groups, and therefore whether it is set up to deliver the organisation’s purpose. By embedding “doing the right thing” for each of those groups you also ensure that you deliver positive ESG outcomes as opposed to focusing purely on profit while talking publicly about a detached ESG strategy that isn’t embedded and exists on paper only.

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