In three years time, there will be only four or five advisory and distribution companies in the UK. This is the bold prediction of Gareth Marr, chief executive of newly launched IFA Origen.
Marr says there will undoubtedly be more consolidation, citing the usual industry bugbears such as PI, poor public perception and a heritage of misselling within many firms. But he goes one step further than most, including multi-ties in these four to five companies. Marr has more than enough experience in this industry for his opinions to hold weight.
Last week, he became chief executive of a company made up of the five IFAs wholly owned by Aegon but he has been a highly successful entrepreneur and regulator in financial services for over 30 years.
He began at Phoenix Assurance in 1971, moving to Pointon York in 1979. In 1984 he formed his own company, Moores Marr Bradley, where he remained until 1999 when he joined Advisory & Brokerage, bought by Aegon in 2002.
He has also seen life from the other side of the fence as deputy chairman of Fimbra and chairman of the Association of Pensioneer Trustees. He was the only practitioner on SIB's steering committee for the pension review, was a witness in the judicial review and in 1994 appeared before the Treasury select committee.
Marr is firm in his belief that consolidation will increase exponentially over the next few years, which is why he brought A&B into the Aegon fold. Aegon acquired 100 per cent of A&B and national corporate IFA Momentum in August 2002. Two months earlier, it had bought a 50 per cent stake in Wentworth Rose, buying the other half last month. Kent-based Aurora Financial was snatched up in January this year and Surrey-based IFA Elliott Bayley in June 2003.
Aegon had always encouraged the firms to operate on an individual basis although when the product provider initially went on its buying spree, the rumours were that it would transform them into tied distributors. Marr says: “None of the MDs of these firms ever would have bought into that. From the outset, we were all committed to maintaining our independence.”
But after meeting on a regular basis, the five MDs began thinking about the idea of greater co-operation. Last autumn, they realised they were gelling together as colleagues rather than rivals.
“We would have these Aegon IFA dinners and David Henderson would inevitably remark to one of us that he was happy we had all come through it without a fistf ight,” says Marr. The origins of Origen lay in these dinners, which spawned a project called “centres of excellence”, which meant using the products and services of each other's firms as much as possible.
Marr says while the centres of excellence project worked well, he kept coming up against hurdles, such as who owned clients shared across multiple businesses, branding and whether they should white-label. Then, on “one drunken night in Paris” last year, the MDs sat in a hotel bar toying enthusiastically with the concept of forming a single national IFA out of the five firms.
But when Marr and the others went to Aegon, the provider was extremely surprised by the concept. The companies were very different from each other and, according to Marr, there was never any mention of squeezing them together into one firm.
The five MDs made a presentation to Aegon UK in February and then to the international board in March. They had spent the winter “very quietly” putting the business plans together, so when the move was approved by the board it took only two months to launch the new operation.
At one time, fewer than 50 people worldwide knew of the consolidation plans. Even until the launch, held at Ascot last week, none of the 500 staff from the five IFAs was aware why they had been called together. “It was a tense moment,” recalls Marr, admitting that at one time he slipped on dark glasses, put on his headphones and blared some Lee Perry reggae through his iPod to calm himself down.
Five fiercely independent IFAs bringing such a bold plan to Aegon's great and good had seemed somewhat risky. “Aegon had spent a lot of time convincing the press it had no intention merging us and now we had come and asked for it ourselves.”
Wryly, Marr admits luck was on his side, with the Origen announcement coming only a day before news broke that national IFA Bradford & Bingley was to dump its recently-purchased IFAs and multi-tie The Marketplace. “Let's face it, would you rather be an IFA working for Origen or B&B right now? It's a no-brainer,” he says.
Marr is happy to speculate on growth potential for the new IFA. There are plans to expand in the North and across the country and he will not rule out future acquisitions but believes IFAs will come to him rather than having to seek them out.
The model developed by the five MDs is a “multiplistic” distribution model, which Marr says does not only include an IFA but also a multi-tie. “At the core of the model is an advice-based service but we have other types of distribution as well.”
He says Origen has already become a preferred supplier for the Telegraph, the Scotsman and the Mirror newspapers and has 12 per cent of the worksite market in the UK for services such as redundancy and retirement planning.
Marr still works at the coalface as much as he can, retaining responsibility for a number of high-profile clients such as lawyers, aristocracy and stars of the music industry and he says they have often become good friends.
Of late, Marr has taken more time to dwell on what is important to him. He was diagnosed with throat cancer last year and went through gruelling therapy to rid himself of the disease. “It forces you to think about your own mortality and what is important to you in this life. For me, number one is the two women in my life – my wife and daughter. Just making sure you are living a happy life is very important.”
He has since made more time for regaining his fitness and indulging in things that make him happy. His favourite pastime is horse-racing, which he tries to attend at least once a month. He is hooked on jazz, mostly sax, ranging from classic Charlie Parker sets to the expressive Thelonious Monk. The free-spirited IFA also has a special place in his heart for reggae pioneer Perry.
“The one thing I hate, though, is country music. I agree with jazz great Buddy Rich, who on his deathbed was asked if he had any regrets in life. 'Just one,' he replied, 'country music'.”
Lives: Cookham Dean, Berkshire
Education: Peripatetic as father was in the RAF
Career: 1971-78 Phoenix Assurance; 1978 NPI corporate pension consultant; 1979-84 Pointon York Group consultant; 1984-99 Moores & Bradley/Moores Marr Bradley founder and chief executive; 1999-2003 Advisory & Brokerage chief executive Regulatory career: 1999 appointed to FSA handbook committee; 1995 appointed to SIB's steering committee as Fimbra representative for pension review; 1993-98 elected Fimbra deputy chairman; 1992-96 served on Fimbra disciplinary, rules and policy committees; 1992 appointed member of Fimbra council as pension expert Career ambition: Within next three years to be chief executive of the best advice and distribution firm in the UK Life ambition: Be alive and happy.
Heroes: Charlie Parker, Thelonious Monk, Lee Perry, many of my clients who are very inspiring Likes: Horse racing, jazz, keeping fit and swimming
Dislikes: Country music, cynics in the industry who keep putting financial services down Drives: An old Ford