David Sachon, chairman of TU Financial Management Services, reveals how a shift in strategy has meant it can now offer more to clients.
30 November 2020
Established in the 1960s to look after the subscription fees of trade unions, TU Financial Management Services (TUFMS) has evolved into a successful niche fund management company.
Unlike most investment businesses, any profit TUFMS makes providing investment solutions for trade unions and other not-for-profit organisations is passed on, not to shareholders, but to charitable causes – a donation each year of up to £200,000.
David Sachon, TUFMS chairman, explains: “We work with the trades union movement to help them invest in stocks and shares. We outsource the fund management itself, so we introduce them to one of a few firms with whom we have a trusted relationship, and they tailor the investment strategy accordingly.
“TUFMS gets a fee for those introductions and any profits go to the charity that owns us – the TUUT Charitable Trust. The trust then donates the money to good causes recommended by the trades union movement.” Recent examples of this include much- needed funds for food banks in the UK, and education and health programmes in Africa.
TUFMS’s board comprises four people with City of London connections and seven members who are trade union leaders. David, who is also a TUUT trustee, has extensive City experience and his last role before joining TUFMS in 2006 was MD of an asset management firm.
Strategic shift was pivotal moment
Looking back, David sees the decision to outsource fund management as a pivotal moment for TUFMS. “We were set up as a unit trust that just about all the unions invested with, but by about 10 years ago the trust did not have the traction to compete with investment advisers who were telling the unions to take a more proactive stance in their investment strategies.”
David says the TUFMS board considered whether it “would be better to shut up shop”. Instead, it opted to outsource management of the unit trust and move to the introducer role it now plays. “That has given us access to a wider range of fund managers and investment products, which means we can approach a bigger customer base,” says David.
The strategy has been a success: TUFMS works with 40-50 organisations, mostly trades unions, and has £50m+ under outsourced management in the unit trust and, through its introductions, advises on a further £40m+. “That might be a comparatively small amount,” says David, “but it’s important to the organisations we work with, especially the smaller unions.”
Despite stockmarket fluctuations caused by Covid-19, TUFMS is on track to hit its financial targets for 2020. However, enforced working from home has been a challenge. David explains: “We’re normally based at Congress House, the London headquarters of the Trades Union Congress, which helps with new business leads and maintaining close relationships within the movement.”
Shipleys has been TUFMS’s auditor for some years and David says he values Shipleys’ “good knowledge of how we operate within the union movement”. He adds: “We recently outsourced the day-to-day financial management of accounts to them, so I look forward to working even more closely with Shipleys.”
For the future, TUFMS wants to extend its involvement with trade unions by helping regional branches to look after their assets, while its charitable targets include tackling child poverty in the UK through providing better IT equipment for disadvantaged families.
Find out more about TU Financial Management at http://tufm.co.uk/tufms