Bristol & West's £40m move to snap up IFA Willis National is the
latest example of a provider elbowing competitors aside in the dash for
The move comes hard on the heels of Australian giant AMP's decision to
acquire Towry Law.
Suddenly, national IFAs are looking over their shoulders in anticipation of an approach from a provider offering a golden future.
B&W has made three advi
ce-based acquisitions in the past year alone – Chase de Vere, portal
Moneyextra and now Willis National – and is still in the hunt for more,
saying it would be “very interested” if another IFA came up for sale.
AMP, despite taking flak for the Investors' Compensation Scheme
intervention over Towry, is understood to be keen to develop a host of
But if either company were to hit the acquisition trail again, it would be
likely to face stiff competition. B&W admits it had to fend off several
other rival bids for Willis and believes just about every mid-sized to big
provider is on the lookout for guaranteed channels to distribute their
B&W director of strategy Martin Palmer says: “Advice is such a dominant
area of the market but is underserved by the major players and established
brands. I would say most are now looking to remedy this by creating
better-known IFA brands.”
Bradford & Bingley has gone some way to achieving this with the
high-profile transformation of its branch network into independent advice
B&W considers B&B to be the most prominent blip on its radar screen of
competitors but warns that the biggest players risk “cannibalising” their
core businesses if they adopt a similar buying strategy to its own.
B&W's bold buying strategy has come in for considerable praise.
Pretty Technical Partnership partner Kim North says: “I think the B&W
acquisitions are very interesting and make perfect sense. The future of the
industry will be dictated by technology, independence and good products –
all things which B&W has acquired over the last year.”
Technology looks certain to be an area in which future battles will be won
or lost. B&W has been quick to state that it bought Willis to complete its
goal to offer advice from all angles and is merging the IFA with Moneyextra
to give internet, phone and face-to-face advice.
B&B has a rapidly expanding internet operation of its own with
Charcolonline, which B&W acknowledges is “not dissimilar” to its own
proposition although Charcol believes there are fundamental differences
between the two in terms of delivery of advice.
But the two banks are not alone when it comes to technology. When Misys
decided to create an IFA monolith with its acquisition of rival network DBS
last month, it was made clear from the start that their portals m-link and
Assuresoft would be merged into one. This is an area that many expect to
become the most profitable for Misys, which remains foremost a software
But not everybody in the industry is pleased with the way things are
going. Mortgageforce managing director Rob Clifford says he is worried that
history may be repeating itself after witnessing the spiralling costs which
followed the hoovering up of estate agencies by banks and building
societies several years ago.
He says: “The theory of all this is good but whenever there is a fight for
distribution there are always consequences. The bidding becomes an auction
as there are usually several suitors for every distribution channel which
only serves to drive up prices.”
Birmingham Midshires head of lending Michael Bolton says: “It seems to be
fashionable to jump on this particular bandwagon but just because everybody
else is doing it does not make it right. What makes a provider believe it
can run an organisation which is completely different to its own?”
But it is not only rocketing prices which could be a concern. Many believe
the buying frenzy is at least partly stoked by moves to end polarisation.
Some parts of the newly acquired business could be used to set up
In the case of AMP, it says depolarisation would be the icing on the cake
but it is not clear whether this applies to its IFA purchase or perhaps
more relevantly its fund supermarket Ample.
Bristol & West is not forthcoming about what lies behind its purchases
although it says depolarisation will make little difference to the market.
On the network side, Misys and DBS have hinted that demands from members
may see them offer some type of multi-tied arrangement alongside its IFA
KPMG Corporate Finance partner Richard Clarke brokered the Willis deal on
behalf of vendors Abbey National and Willis Group.
He says: “There will be more deals done by the end of the year. It is
still a highly fragmented sector with scope for further consolidation and I
would say there is still lots more activity to come.”
Despite his prediction, Clarke says he was taken aback when AMP paid
£75.7m for Towry, not so much borne of the pension liability row but
because the deal came so far in advance of the FSA's depolarisation
B&W's recent moves put it at an advantage if the FSA burdens the industry
with depolarisation but also gives its efforts not to get swamped by
consolidating competitors a much needed boost.
Either way, it is a win-win scenario and as long as this is the case,
providers will continue to be prepared to slug it out in the battle for