Some good friends of ours are fridge magnet collectors. It would be stretching things to say they true “memomagnetists” – some of whom own vast collections of magnets spread on special metal boards throughout the house or held in old print cabinets.
Still, every time we go to their house a new magnet has pride of place on their fridge door – the memento of a holiday or a witty aphorism they feel merits being shown off to their guests.
The last time we called in, one newly-acquired magnet caught my eye: “Been there, done that. Then been there several more times because, apparently, I never learn.”
Originally, I thought of it as a reference to my own journey through life, making the same mistakes again and again and not learning from them. But last week, I found myself thinking about that magnet in relation to an interesting article by Money Marketing news editor Justin Cash about the “starkly different strategies” providers are using to achieve more sales.
Cash wrote: “It is hard to deny a recent trend towards providers increasing their distribution potential through acquiring advice firms.”
His comments came in the context of adviser firm acquisitions by providers during 2016. Among them are deals by Standard Life to add planning firm Jones Sheridan, as well as advisers Baigrie Davis and the Munro Partnership, although a prospective purchase of Norwich-based Almary Green fell through in September. About two years ago, it bought Pearson Jones from Skipton Building Society for an “undisclosed sum”, now known to be about £9m.
Cash pointed out that Old Mutual has also added advisers to its new national advice division Old Mutual Wealth Private Client Advisers over the same period, including Cheshire-based advice firm JW Financial Planning, Beaumont Robinson in West Yorkshire and DQS Financial Management, in Devon.
The issue is not so much whether this spending spree is anything new but whether it will work for the product providers concerned
Meanwhile, Schroders also took a “significant” interest in network Best Practice through a stake in its parent Benchmark Capital, which includes IFA Aspect 8, network and financial planning firm Evolution Wealth, its platform Fusion Wealth and technology firm Creative Technologies. Aviva’s distribution strategy, Cash tells us, is different, focusing on “organic growth” by adding advisers to its tied network.
My problem, after writing about this space for many years, is working out how much of it is a genuinely new “recent trend” – or a re-tread of practices that have been the hallmark of the financial services industry since time immemorial.
Let’s start from the basics: providers have always sought to buy distribution, whether through the most prosaic mechanism of paying commission to advisers who sell its products; using inducements to promote themselves and their wares, including gifts, seminars, overseas “training events”; or spending on adviser firms’ “support services”.
Taking stakes in firms they think will help them achieve the same aim is part of a continuum, not a new departure from the norm.
Even Standard Life, whose recent purchases seem to have caused a stir, has long-standing form in this game, its “now I’m in, now I’m out” strategy in relation to buying IFAs having more twists and turns than the Hokey Cokey.
Back in late 2010, Standard Life jettisoned its 15 per cent holding in 2plan Wealth Management and also disposed of the 20 per cent stake in in RSM Bentley Jennison it had bought only two years earlier.
In some cases, these acquisitions involve the same people again and again. Take Baigrie Davis, snapped up by 1825 recently. One of their non-execs is Amanda Davidson, who was previously a director there for almost 10 years.
Amanda is a veteran at this game, having been a director at Holden Meehan, London-based advisers taken over by Bradford & Bingley in 2003, as part of the former building society’s ill-advised splurge – which included Colegrave & Aitchison in Glasgow – aimed at carving out a space for itself in the IFA market. Barely 18 months after that B&B tied itself to Legal & General.
More than 15 years ago, another building society, Bristol & West, reeled in IFA Willis National for £40m, attempting to merge it with Chase de Vere, which it had purchased back in 2000. Chase de Vere was subsequently acquired by Swiss Life.
Towry, that much-loved firm of advisers when under the helm of former chief executive Andrew Fisher, and sold by venture capital firm Palamon Capital Partners to Tilney Bestinvest for £600m in April this year, was once briefly owned by AMP, the Australian insurer.
Aegon, meanwhile, has long wrestled with how to make Origen, its 12-year-old merged entity comprising five IFAs – Advisory & Brokerage, Aurora Financial Group, Elliott Bailey, Momentum Financial Services and Wentworth Rose – a success after years of losses. Last year it admitted that if someone turned up with a basket-load of cash and asked to buy Origen, it would consider selling up.
The issue, then, is not so much whether this spending spree is anything new but whether it will work for the product providers concerned. Past history is littered with examples where it has failed. Still, who knows: maybe like my friends’ fridge magnet, this time the lessons have been learned. Or maybe not.
Nic Cicutti can be contacted at firstname.lastname@example.org