Graham Bates is a firm believer in the IFA as entrepreneur. The extrovert founder of Leeds IFA Bates Investment Services has been setting up and running businesses since he was at school. He recalls sitting in the back of maths class working out calculations for his own enterprises – at the time a disco and a gardening business in which he employed his schoolfriends.
Sure of his calling, after a year out, he went to Manchester Business School to do a course for entrepreneurs before joining a venture capitalist, where he mostly provided marketing advice. Businesses he has launched since include a property business, which he still owns.
“I entered the IFA market from the point of view of being a businessman rather than an IFA,” he says.
But this businessman may now face his biggest challenge. Previously a privately owned business, Bates Investment Services has for the last few weeks been the advice arm of The Money Portal run by Richard Craven. Bates is now the board member responsible for the advice division as IFA director.
Bates says he cannot remember who made the first approach but the first meeting took place in the same hotel as this interview, the grandiose art deco Paddington Hilton.
“Richard and Tony Morris were sitting at one of the tables in a cloud of cigarette smoke laughing their heads off. I can gauge in almost two seconds flat whether I am going to be on the same wavelength with people.
“I had been involved in a number of corporate meetings and sat across the table from people and known, no matter how big the chair was, I could never have done business with them. With Richard and Tony, I thought these guys are a little maverick and I am a little bit maverick but underlying that the real focus was building a quality advisory arm.”
Before the deal, Bates felt he was confronted by a choice facing many IFAs – either become a consolidator himself or join with another organisation.
He believes The Money Portal deal, for which many of the details were thrashed out at the Sway conference in Monte Carlo this year, helps preserve the best bits of Bates' identity.
“With Bates, we built an infrastructure which some of the businesses we talked to would have wanted to disband and merge with their own. But we had a really good team of people. We tried to find a way forward that would keep the right team intact as well, which is what TMP gave us. It wasn't just about best value, it wasn't about getting cash.”
Bates believes the deal, which was mostly for shares, gives him access to the corporate expertise to help him build value. He is looking at possible acquisitions and hiring individual IFAs, as well as doing a marketing overlay on TMP's direct clients to bring some over to the advised side.
However, not all has gone quite according to plan. The original announcement was for The Money Portal to join with both Bates and the David Aaron Partnership but the latter deal fell through. “The plan was always that Bates was going to be the platform on which to build. It was never going to be Aaron South, Bates North. The David Aaron business would have been a good fit but it was not central to the model. What is central to the model now is that we react either by individual quality RIs coming to us or in acquiring other businesses.”
The firm is satisfied that it can become a medium-sized player. Bates says its aim is 150 RIs of the “Jaguar” type – not quite “Rolls-Royce”, who advise the very high-net-worth, but definitely not the “Mondeo” territory of what Bates calls the big headcount firms.
Bates says he is aiming for the position he felt Chase de Vere once occupied. “The gap is there for a medium-size quality firm with RIs in the top 25 per cent in the country. We do not see why should pile in money and sit on heavy losses. We think we can have a profitable model over the next three years.” He also believes the size lets him preserve the current Bates culture, which will still focus strongly on people.
“If we had been running that business purely for the benefit of the shareholders – myself and my sister Helen – we would not have had a head of research or two people working on keeping our name in the media. They help to grow the business but they are expensive commodities and are not going to maximise profits for the shareholders short term.”
He is a keen believer in his present team. “I have learned to find people who are better than me at the different functions of the business. You stick to what you are good at. If you find the right person, as a business owner, look after them and hang on to them.”
One of the defining characteristics of Bates over the years has been good press relations, which have helped the existing 40-RI firm punch well above its weight.
Bates has a more positive attitude to journalists than perhaps many IFAs. He puts on no airs and graces in their presence. He is quite happy to book a room in a Leeds restaurant with a group of national hacks and belt out his favourite numbers from musicals between courses while urging his guests to do the same. He does not therefore exhibit quite same fear of the press as some of his peers. “Journalists are real people after all,” he says.
Bates adds: “The only way to build a significant profile for your business is to give up your time. I was putting two-thirds of my time into PR at one stage before I got people in to do it.”
But he has more pressing advice for his fellow advisers, particularly those contemplating selling.
“You have to be realistic about what your business is worth. Do not be too greedy. Look at the big picture. Expect changes. Iron out well in advance of doing the deal what those changes are going to be. You are not going to sell your business and wake up the next Monday morning and there will be no change.”
A few weeks in, Bates seems to be relishing the prospect of change more than most.
Born: August 1964,Corbridge, Northumberland.
Lives: Near Ilkley, West Yorkshire, with partner.
Education: Comprehensive school in Boston Spa, near Wetherby
Career: 1984 – Manchester Business School entrepreneurial course. 1985-90 – joins venture capital boutique Park Dean Consultants. 1991 – property business, BPH, which he still owns, 1993 – founds Bates Investment Services with his sister Helen Peace. October 2003 – sells to The Money Portal, becoming IFA director Career ambition: “To see TMP built into a valuable distributor with strong value while also building Bates in a qualitative way so I can step back and be proud of it.”
Life ambition: “I am still working on my life ambition but it is probably to spend more time in the South of France.”
Hobbies: Singing and spending time with his two boys of five and three.
Dislikes: People who are unnecessarily arrogant, conversations with people who have chips on their shoulder and poncey restaurants.
Likes: A good night out in a bar with a karaoke machine, spending time with friends and down-to-earth people.
Car: Jaguar two-seater convertible XK8.