Why working with a trusted adviser really matters-Part 1

Why working with a trusted adviser really matters-Part 1

In this two-part Q&A with IFA Magazine’s Brandon Russell, Keith Brown, Chief Executive of Wealth Holdings, talks to us about how business is conducted as a mergers and acquisitions brokerage in financial services and why he’s so excited about the prospects he sees in today’s advice marketplace.

It is no secret that there are many merger and acquisition brokerages in financial services, all focused on trying to deliver positive results to their clients.

However, finding the correct M&A brokerage to meet the needs of your advice business is critical as there are so many factors involved. As Keith highlights here, it’s crucial that both the buyer and seller value and understand one another’s needs as it’s really all about people at the end of the day, ensuring a seamless transition and maintaining client relationships.

In the Q&A, we ask Keith Brown to explain the process behind getting the right outcomes and ensuring the end results are positive for all involved – and why he believes that understanding all the different parties’ needs in detail is key.

Brandon: I’m sure that many IFA Magazine readers will be familiar with Wealth Holdings, but could you remind us about the business and what it is that you do?

Keith: Sure, I’m the chief executive of Wealth Holdings and we’re a mergers and acquisitions brokerage in financial services. I’m pleased to say that we work with some of the larger acquirers in the market but also a lot of smaller ones, new startups, consolidators too. There is a real choice out there at the moment, which is very exciting. We help financial advisers and business owners to find the next stage in their career, whether it be retirement or sale or part sale of the business or whatever it is they’re looking to do next.

Brandon: What does the adviser marketplace look like at the moment – from your perspective?

Keith: It is really exciting. During the pre-COVID times, we started to see lots of private equity money coming into the market. I was doing some consultancy work at the time and getting a lot of phone calls from America and other locations where people were asking about the UK financial services market. As well as established players in the M&A space such as traditional consolidators who have made multiple acquisitions over the years, there’s more money coming in from different sources too. I’d say there is now probably in excess of 30 new firms that have raised money and are operating in the market with some clearly differentiated offerings. New deals are being completed monthly which demonstrates the signs of a healthy marketplace. It’s also brought more diversity to the market, which has created greater choice and options for both the seller and buyer.

Whilst it’s been a difficult period in the economy for most people, the IFA market has proved itself to be remarkably resilient. Investors and backers are still really focused on the UK market, and they’re interested because the IFA business models are robust and resilient, and the people are resilient too. The businesses have stood up well to the challenges of the pandemic and have adapted accordingly. The increased use of technology, for example, which came in almost overnight three years ago, has transformed the way the business of advice is done – for the better in my view.

I’ve been doing this over 30 years and it’s been like that all the way through – an evolution rather than a revolution. Its why investors are still really interested in the market, why there is PE money coming in still, it is also why we’re seeing lots and lots of interest and activity.

Brandon: How do you match firms and what is your process when talking to potential buyer and sellers?

Keith: What is most important to us is the end outcome – as well as how we get there. The first thing is, even with the acquirers, we like to get to know them, what they are about, what they want, what their red lines are etc. It’s also important to try and delve into the future and consider what life would look like post-acquisition, whether they wish to keep all the staff, the office, the brand etc? When it comes to clients’ portfolios, do they want the investments to move into their investment strategy, onto their choice of platform/s or is the business vertically integrated? Our job is to clarify exactly what is their expectation, as well as the fees, the charges and the culture. I’d say that the culture is crucial, Culture is so important; getting to know the people and working this out is key to how we operate and it’s firmly behind our success. By getting a thorough analysis of all these factors, we can be sure that the introductions we make are based on real synergies.

We are also very fortunate with the firms that we work with. We go one step further and talk to people who have already signed and ask for references as well as their feedback on the whole process and outcomes which they’ve experienced first-hand. We do a lot of research with the acquirers and sellers to fully understand their proposition, and then we are able to answer all questions that might be asked. We then spend a lot of time finding out exactly what each party wants, which means asking lots of questions and doing lots of due diligence behind the scenes.

We’ll always talk about the needs of the end-client who is actually receiving the advice from the business. Keeping clients happy is key as client retention really matters. I’ve said this over the years, there is £1 that comes into an IFA business and it’s the client’s pound. They trust us with their money, and we all get paid down to that element. In order to have a good, successful business, you need to look after that money and look after that client and meet – or hopefully exceed – their expectations. They’ve been used to receiving a service in a particular way for five, ten, fifteen, twenty years maybe so any change needs to be carefully considered in how it will impact them. We’ve really got to make sure that client is looked after properly going forward as much as they were looking back.

Our involvement extends to conversations and deep dives with sellers into their current client proposition as well as their own expectations and plans as principal/s within the firm and future involvement – or not! There are so many different requirements to be met. There are also more and more buying growth strategies. We do lots of research, spend a lot of time talking to both parties to really understand what it is they want, and from that it is a natural process. This tends to eliminate certain groups because of the answers we get which narrows things down and then it’s really about gauging the culture, people and personalities to work out where a strong fit might exist.

Our process for that is to make a single introduction, we have a particular philosophy at Wealth Holdings where we organise what we believe is the most appropriate introduction. We will have many conversations with both parties, under an NDA of course, so confidential information can be aired and people’s opinions and thoughts taken properly into account. We pursue that introduction until it completes or one party says this process, it’s not right for us. It might be the buyer; it might be the seller. At that point, then we’ll say, okay, where do we go next? That didn’t work for whatever reason, Why and where do we take it? That is the process on how we do it.

When it comes to what we don’t do, I’d argue that this is equally as important. We don’t have multiple conversations or multiple negotiations going on. We just don’t think that’s fair on all the parties. Everyone has invested a lot of time and effort into this trying to get it right and we don’t want to be doing something in the background that’s counter to that conversation. This way it’s fair to everyone and it’s a process which works well for us and everyone involved.

As I said, there’s a lot of research to be done, there’s a lot of time invested into the process. It isn’t just a case that we’ve got a firm that is based in Kent for example, with £50 million AUA, this turnover, this profit, and we email it out to lots of people and say, are you interested in buying it? That’s not how we work at all.

Instead, by getting to know the business, to really understand what they want by way of outcomes and also from our experience and knowledge, we can then go to the market and have a couple of conversations. It’ll only be a couple because we’ll know at that stage. We will then make some suggestions as to people who should potentially be spoken to and get their views on that detail.

Financial advice and planning businesses are all about people – and working with M&A situations is no different. We never forget that. We treat everyone involved, whether buyers or sellers, with the utmost respect and attention to detail that we believe such transactions deserve.

Coming up next month…

In next month’s edition of IFA Magazine, we bring you part two of the conversation between Brandon and Keith, where they discuss what good outcomes look like for both buyers and sellers of advice firms and also take a look under the bonnet to discover the key considerations that buyers and sellers need to take into account to achieve successful outcomes.

About Keith Brown:

Keith is CEO at Wealth Holdings. He is a performance-driven individual who likes to drive change, working collaboratively as part of a team.

He is an experienced financial services professional, having worked in the sector for almost 30 years as a Planner, Business Owner and Managing Director. Keith has held senior management and board positions including Group Training Director, National Operations Director and Head of Business Development for one of the fastest growing independent wealth management companies in the UK.

He has worked as part of a team to complete over 50 acquisitions and integration projects and has had strategic responsibility for planning and implementation of integration activity and processes.

Keith has displayed a track record of building and leading teams to achieve agreed targets and budgets.

He works with internal and external partners to achieve agreed success through a collaborative approach and pragmatic problem solving, building strong, professional relationships to deliver change management programs and manage complex relationships.

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