Not many people change their career path after a conversation in a pub but it is an approach that has worked for Retiring IFA and Foundation Resourcing managing director Stephen Hagues.
“I had been working for an industrial recruitment firm in Leeds for five years when I met this guy in the pub,” says Hagues. “He said I should join him in doing headhunting for financial services. It sounded better than trying to get people to sign up for work at a factory and I have never looked back.”
After a two-year spell at Quest Executive Search, where he increased turnover to £400,000, Hagues struck out on his own. He now occupies a unique position as managing director of a recruitment business, Foundation Resourcing, and an IFA brokerage, Retiring IFA.
Hagues says: “I set up Retiring IFA three years ago. As the recession got worse, there were fewer areas for us to recruit in. It was like being on a rock with the tide rising.” He quickly realised that recruiting candidates was not the only service he could offer to businesses.
“By finding retiring chaps no longer in need of their business or client base and who wanted to sell up, we realised we could help fast-growing firms grow even more quickly. The move to marketing businesses for sale rather than candidates was fairly easy.”
Retiring IFA works by listing IFAs for sale and potential buyers on its website. “The acquirer gets introduced to services that can help grow their business, such as client funds and introducers,” says Hagues. “From the retirer’s side, we get a feel for their business and introduce them to three or four good prospects. We manage the process with a view to getting the best offer.”
Haynes says the business is not exploi-ting the market or ramping up the value of businesses for sale. “It is not a case of going into IFA businesses, packaging them up and carrying them out. We have been in the industry for a decade and our success has been based on integrity. When someone is selling their business, they need to know it is being brokered by someone they can trust. We are not encouraging IFAs to leave the industry but are giving those who already want to leave, a route out.”
This commitment to integrity is yielding results. Retiring IFA made more than 30 sales in 2009 and 40 sales last year and gets three or four buying enquiries a day, generated by direct communication channels such as mailings and emails. It has between 500 and 600 buyers on its books.
“We probably have the majority of the buyers out there,” says Hagues. “There are more people wanting to buy IFA firms than sell them at the moment. It is bizarre because, with the retail distribution review coming, you would think everyone would want to get out.”
Hagues believes one reason for the current influx of buyers is a need to build up client banks before the RDR. “There is a client grab going on. The RDR is going to increase transparency and I think lots of clients will not be happy to pay for advice once fees are stipulated more openly and are not absorbed by product providers.
“Combined with a rise in reduced-rate non-advised products on the internet, IFAs staying in the industry after the RDR need to attract more clients in order to grow and what retiring IFAs have got is an existing bank of clients who are happy to pay for quality advice. It is a resource people are wanting to use.”
Surprisingly, the old-model IFAs that will eventually exit the market following the RDR are not putting themselves up for sale just yet. “The old commission models are biding their time. If you do not have any trail commission it does not matter what fee you multiply it by, you are not going to end up with a lot.
The best route for these IFAs is to carry on generating initial commission until the RDR arrives and then sell for what they can get.”
Hagues is undecided on the effect the RDR will have on the industry as a whole. “It is better for customers if there are no salespeople charging sky-high commission – but how many people will save or invest if someone is not prompting them to do so? It will be a smaller industry and I am not certain that is a good thing.”
For Retiring IFA, the impact of the RDR has been positive so far. “Many IFAs are looking for exit routes before 2012, which means we are getting a lot of business. But there is always more to be done. We want to get our turnover to £1m before 2012 and have been honing our buyer identification model to get the top quartile of buyers. The buying population is ready to absorb anyone wanting to get out. All we need now is more retiring IFAs.”
However, the outlook will be drastically different for Retiring IFA after the RDR. Hagues says: “We will see a reversion to organic recruiting in financial services. There will be fewer competitors, so firms will focus on growth rather than consolidation – presuming they can find the people. That is where Foundation Resourcing comes in. Although we will keep Retiring IFA going, it will no longer be our engine for growth come 2013.”
So what is the long-term engine for growth? A more aggressive approach to presenting struggling firms with the opportunity to exit the industry will play a substantial role. Hagues says: “We will look at which businesses the recruitment side is working with in terms of the bottom quartile and say to these firms, ’Have you seen this buyer who might pay you X, Y, Z your trail income?’ Then we can see if we can help them sell their firm.”
Hagues also intends to generate more business through an increased online presence and database expansion. “Restructuring the retail financial services sector and making it more effective is what we are here to do. We want to clear a path for the key organisations to grow and flourish. What is great about my job is that I get what I want by helping everyone else get what they want.”
Born: Beverly, East Yorkshire, 1976
Lives: Wensleydale, North Yorkshire, with wife Emma and three children
Education: Business management degree at Hull Business School, postgraduate diploma at the Chartered Marketing Institute
Career: 2008-present: founder and managing director, Retiring IFA; 2005-present: founder and managing director, Foundation Resourcing; 2002-05: founder and managing director, Progession Consulting LLP; 2001-02: branch manager, Quest Executive Search; 2000-01: executive search consultant, Quest Executive Search; 1999-2000: recruitment consultant then business development executive, ASC Industrial Recruitment
Likes: Weight training, chess and martial arts
Dislikes: Bad payers, blame cultures and liver
Drives: A Porsche 911
Book: Think and Grow Rich by Napoleon Hill
Album: Red Hot Chili Peppers, Live In Hyde Park
Career ambition: Restructure and increase the GDP contribution of retail financial services through building more effective organisations around individuals of exceptional strength
Life ambition: To go from success to achieving something really significant
If I wasn’t doing this, I would be…A teacher or policeman