Ian Mattioli on growing his business while cutting investor costs

Ian Mattioli has always had grand plans for Mattioli Woods, the business he co-founded over 20 years ago with Bob Woods.

The pair were in their late twenties when they struck out on their own to set up what was then a pensions technical consultancy. They realised that many pension scheme members were triggering big tax charges because they misunderstood the complicated pensions regulations of the time.

It did not take long for the business to move into profitability and at the end of its first year it had 150 clients on its books and £100m of assets under administration.

From the first days, Mattioli says, they have been keen to invest in the future to ensure the business is able not just to grow but to grow sustainably. Mattioli Woods started out in a garage and had no employees but one of its first purchases was a telephone extension system that allowed 36 extension numbers.

“There were only two of us, it cost quite a lot of money and filled the garage, but we carried that for 10 years with us. By investing right, it does you well.”

This year the firm passed £4bn of assets under advice and administration. It now employs 350 people across its three areas of expertise – Sipp and SSAS administration, employee benefits consultancy and wealth management.

Mattioli Woods listed on Aim in 2005 and has seen a steady rise in its share price. At launch it was 132p and this had more than doubled to 300p in just two years and peaked at 400p in October this year. It currently generates an annual turnover of £20m but Mattioli says the plan is to increase this to £100m by 2018.

To hit this target, he says the business needs to increase the number of Sipps and SSAS it runs from 6,000 to 15,000 over the next five years, as well as increase the employee benefits and wealth management income substantially.

Mattioli says this will be brought about by a mix of acquisition and organic growth. In the past three years the firm has acquired Sipp company City Trustees and employee benefits firm Kudos Financial Services. This year it added adviser firm Atkinson Bolton and acquired the pension book of Ashcourt Rowan.

“We typically make one or two acquisitions a year and they are between £1m and £7m in value. Organically we bring in the equivalent of two acquisitions a year. We would spend, broadly, about £10m on acquiring that business.”

Mattioli says they are looking for new acquisitions, but while there are a lot of businesses for sale, it can be difficult to find the right ones to buy. “You can always buy rubbish but you need to buy well.”

But growth is not just about buying, says Mattioli. The company put a graduate training programme in place from its very first days when it was still in the garage and had only one employee.

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The programme is time-consuming and labour-intensive, he says, but means that when other businesses may be struggling to recruit people, Mattioli Woods has a ready supply of talent with the right training and attitude. “If you get to the stage that your capacity is blocked because you cannot get hold of the right people, it is your own fault,” he adds.

Mattioli’s current challenge is weaving the three strands of the business together into one seamless operation. He says this has become even more important since the RDR as clients start to realise the total level of cost they have been paying.

“What clients will wake up to very soon is they will start to understand total expense ratios,” Mattioli says. “A lot of IFAs give away a lot of their TERs. They will have a platform cost, they will have a Sipp or a SSAS cost, they will have a fund management cost, they may even have an administration cost, on top of that they have their own costs. If you take all that together, that is where you are going to get these massive TERs.

“We believe a fair TER will be set somewhere between as low as 1 to 1.5 per cent. If you look at TERs for some of the big insurers, it is probably 3 or 4 per cent.

“When clients realise they are paying that amount each year, they will suddenly say ‘no, we are not paying it’.”

Mattioli’s determination to blend the different elements of the business together means it should be able to offer clients a broad range of services for a relatively low cost.

“We need to do more for those clients. We need to do SSAS and Sipp which, of course, we do, we need to do their fund management, which is where the discretionary portfolios come in such as Atkinson Bolton’s Oeic, we may have our own protection and insurance solutions. By keeping hold of margin within all of that, we can start to reduce costs and that has to be for the benefit of the client.”

He says this focus on costs will also spell out a bleak future for many small IFAs and for fund management companies that rely on small IFAs for their new business.

“I don’t think small IFAs will survive. They will lose their distribution because clients will not be able to pay or will not want to pay to the 3 or 4 per cent they are currently paying but not realising it.”

He also says it will become increasingly difficult for smaller firms to remain independent as most lack the technical expertise to remain whole of market in a market that is increasingly litigious.

Auto-enrolment is a big issue for many advisers at present but Mattioli is less interested in this than in expanding the firm’s employee benefits advice offering.

“In my view it is not really employee benefits business. It is just a state pension in a different guise. What employee benefits is about these days is deciding where your salary goes. When the recruitment market gets a bit more difficult you will need to entice people in, and if you are 55 your benefits are going to be very different to a 20-year-old’s.”

Despite Mattioli Woods’ efforts to diversify away from its technical pensions consultancy, it has maintained its reputation as a Sipp and SSAS specialist.

In the past couple of years it has been asked by the regulators to step in to run troubled Sipp firms Freedom Sipp, HD Sipp and to take over the running of Pilgrim Sipp. And Mattioli suggests there is more bad news waiting to surface.

“A lot of companies have chased business without thought for the client and without thought on suitability. It has caught up with some already and it will continue to catch up with others.”

To minimise the disruption, he says, the FCA should reconsider its decision to water down its capital adequacy rules.

“In order to run £1bn of other people’s money, a business needs to be sound.”

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Born: Leicester

Lives: Leicestershire

Education: Great local schools to ‘A’ level – Beaumont Leys and Gateway College

Career: 1991-present: chief executive, Mattioli Woods; 1983-1991: Pointon York; 1980-1983: Phoenix Assurance plc when it was a proper life company; 1978-1980: football pools checker, Zetters; 1974-1976: Leicester market

Likes: Almost everything. I love mentoring and training people. Being outside doing something – fishing, running, cycling, climbing, canoeing but to name a few.

Dislikes: Political positioning in both government and business. Career-based non expert non executives

Drives: Cannondale Black Inc, Trek 6 series, Trek Cronus CX, and a Range Rover and my wife Clare mad

Book: I still love that first book that gripped me – Enid Blyton’s Secret Island – pure escapism really!

Film: I am not a great watcher of films or TV, as there is too much to do

Album: The Sex Pistols’ Never Mind the B***ocks, Here’s The Sex Pistols

Career ambition: To see suitability to be the key compliance issue. Pensions and Isas to become lifetime investments used as needed and inheritable by the next generation. To continue to grow and develop Mattioli Woods into a national wealth management business.

Life ambition: Steering, mentoring and leading to see my family and the Mattioli Woods’ teams really achieve their full ability and ambition.

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