It is not a common sight in financial services these days but Cavanagh Group's chief executive Andrew Fay is rubbing his hands in anticipation at the prospects for the rest of this year.
Fee-based IFA Cavanagh Group turned in startling end-of-year results. Issued on the same day that technology giant Misys announced job cuts and apologies for its banking sector, Cavanagh's management declared that turnover had nearly doubled to almost £3.5m from £1.8m the previous year, with profits leaping to just over £2m from around £1.1m.
The group was set up in 1996 by Fay with Simon Redgrave and Neill Millard. They all came from a direct-sales background at Royal Life. Fay had a progressive career path at Royal Life where he “ended up” in the top 20 executives in the business. But he says changes in the market, clients and products all pushed him to go for something different. His colleagues describe him as the financially minded lynchpin of the team.
Seven years later, he is running a firm with 38 registered individuals and with almost 6,000 clients, with around 1,500 in the legal profession. The Haywards Heath office is not far from his home and the group has recently expanded to two more offices in London and Surrey.
Fay attributes his rapid progress to the organic growth model he developed for the business through handpicking advisers and clients.
He says: “Our growth will not necessarily continue to be just organic. We could look at acquisitions and I certainly would not rule that out. We have had several opportunities but it has not necessarily been an easier option for us.”
His RI s are not from legal backgrounds but he insists they have to be highly articulate with a good knowledge of the changes in the legal market to work with these clients.
“We are now organising ourselves so that we are able to assess quite early on whether people will fit with our business model. We train high-calibre advisers and they need a good technical knowledge. We never wanted to have to compromise on the types of good advisers. They have to be good quality and have a synergy with the business.”
Although a comparatively small business, productivity is near the top of the sector. With turnover at the end of 2002 averaging around £116,000 per adviser, for the time being Fay's handpicked recruitment strategy seems to be working. He estimates that this figure will rise to more than £130,000 per adviser before the end of this year.
He is cagey on how the firm will continue to increase its RIs while competing against big networks scooping up advisers with highly paid headhunting teams. But never one to follow the crowd, Fay does not feel the need to “chase” advisers and says the firm has no plans to change dramatically in this respect.
Fay says he believes in going against the grain and puts a big part of his success down to this attitude. He strongly believes that people remain loyal to firms if they enjoy what they are doing and reap the financial rewards and that is what motivates them to work hard.
But having worked hard for the past seven years building the firm, Fay now plans to spend more time with his family. He is looking forward to a break skiing in Meribel in the Alps and is planning to teach his children to ski. He is convinced they will pick it up quickly but not confident about his own ability to learn snowboarding.
He has also taken up sailing recently but is not planning to take this too seriously. He has no ambition to have his own boat and is content to potter along with family and friends who have boats moored near Southampton.
Fay is planning to remain very much at the helm of the Cavanagh ship and is particularly critical of claims that the introducer market's days are numbered.
His plans include expanding the firm and client base through a set of introducers and he has just negotiated an exclusive deal with Place Campbell, whose clients include over a third of London's barristers.
On establishing relationships with introducers, he says: “Expectations are high on both sides and the biggest emphasis should be on what makes both parties most comfortable. They want to find someone who will meet their proposition and to do this you need to have a good infrastructure to present to the market.”
Fay defends the high fees that introducers charge. He says the aspect he looks for is the recommendation, not the cash, and adds: “Introducers have to be able to deliver but you cannot generate a large income based on a case-by-case business. The amount of business that an introducer generates depends on how big each one is and who they have as clients.”
The professional market has plenty of scope, with over 40,000 lawyers working in London alone. Cavanagh only deals with a small percentage of them as it has 1,500 solicitors, lawyers and barristers as clients, but Fay believes the market is there for the taking.
He predicts there will be more niche players in the future and accepts that the competition is going to hot up. For this reason, Fay believes there is a very strong need for Cavanagh to remain independent and stay an IFA.
In a brave move Cavanagh went for flotation on the Aim in October 2001, raising around £1m in capital. Fay says this was crucial to raise the company profile within the sector itself and provide capital. He does not rule out going for a full listing on the London Stock Exchange but says the size of the firm still puts the idea off the agenda for the time being.
Born: September 1965
Lives: In a village in Sussex with his wife, daughter and son.
Education: Thomas Bennett Comprehensive School in Crawley.
Career: At 16, began training in retail management with Sainsburys but joined Royal Life in 1989 as a trainee consultant, became a management consultant and “progressed up the ranks”, taking his FPC exams in 1995. Set up Cavanagh in 1996.
Career ambitions: To make sure that Cavanagh is recognised within the industry and as an IFA provides an excellent service for professional and high-net-worth clients
Life ambitions: Wants to balance personal and work life and spend more time with his family. “It is something that I think you have to be very conscious of.”
Likes: Golf and motor racing and sailing on the Solent.
Dislikes: Poor service
Peers say: “He's a calm collected individual, a very shrewd bloke and an excellent judge of character.”