Rod Milne and Colin Hayden-Cook, the managing directors and partners in IFA HFS Milbourne, have been financial advisers for some time but a recent change of circumstances made them decide to merge their separate businesses into one new firm and the results have been dramatic.
Milne says: “We both wanted to be bigger businesses and it was extremely difficult to do that organically. To take that jump up to a larger level was virtually impossible without an acquisition and merging the two business.”
The two have been friends for many years but the merger decision was only taken when they each had reason to relocate their businesses and realised they were looking in the same area. When they started talking about it they realised there could be other benefits for their businesses.
Hayden-Cook says: “For different reasons, we were both looking for offices in the Guildford area and so we thought rather than looking for two offices, let’s look for one office. When we started to look at the practical and the more we looked and did the numbers, the more it made sense.”
Like many small IFA firms, they were having to juggle the different parts that make up the business.
“Basically, Colin and I were both running around doing everything ourselves. We were advising, we were doing compliance, we were doing HR, we were financials and of course you can’t do everything well,” says Milne.
By combining the two operations, they saw they could remove some of the pressure that the admin and back-office functions put on business and also realised that they could come up with a “best of breed” by combining what each business did particularly well.
Before the merger, both partners had modestly successful businesses. Milne’s company Milbourne Financial Services had a turnover of £620,000 while Hayden-Cook’s Hayden Financial Services had a turnover of £450,000.
They expected to make some efficiency savings following the merger but say they have been surprised at both how quickly and how big the increase in turnover has been.
The turnover for the new company is now standing at £1.6m (an increase of 49 per cent on their previous combined total turnover).
This has not been down purely to efficiency savings but also to each part of the business being able to function properly. The business now has dedicated admin staff, dedicated adviser staff and dedicated paraplanners.
Both Milne and Hayden-Cook say getting each part of the business to concentrate on its area of expertise is key to getting the most efficient way of working.
Milne says: “It has been quite significant. We were not quite sure how much we were going to benefit from the unseen things, such as working together well. If you work together really well, you can put a lot of money on the bottom line. But if it does not work well and the staff bicker and do not get on, it can have to opposite effect.
“We did not anticipate more than a 10 per cent increase in turnover in the first 18 months and it has been much more than I expected it to be.”
“We were slightly surprised by the extent of it,” says Hayden-Cook but he says it has helped having a new business brand to talk to people about and this has helped to generate new business.
The two new partners say the merger process has been remarkably smooth.
Milne says: “We started planning it probably 18 months before it happened and after a couple of months we brought in the staff and the team felt like they were involved so by the time came to move premises they all knew each other.”
“We were quite happy to dot the i’s and cross the t’s, so that there were no mistakes,” says Haden-Cook.
Since the merger, the business has recruited two extra paraplanners and the advisers, Milne and Hayden-Cook and two other advisers have been able to concentrate on their role – advising and bringing in money for the business. The business is in the process of recruiting one more paraplanner to bring the ratio of paraplanners to advisers to one to one.
Milne says: “In one way that was the big benefit to come out of this. The advisers have been able to focus purely on advising.”
Economies of scale clearly have their benefits says Milne. “I used to have to open the post. How can you bring in £40,000 or £50,000 of new business a month when you are having to spend time on things like opening the post?”
Another advantage of the new business, although one they hope not to exercise for many years, is the way the new business creates a real value in itself, without being overly reliant on one person. It is now possible for one or both to sell their stake in the new firm and for the business to retain value as it is no longer dependent on one person’s connections and ability to generate income.
Hayden-Cook says: “When a lot of IFAs set up their practices, although they are creating a business, what they have done is just created themselves a job because they are the business. If you can build a business that is not dependent on you as an individual, it is worth so much more money. It was a conscious decision to build something of value.”
Another plus point they point out is the ability to get away from the office and know there is someone there to deal with anything urgent in their absence – a luxury not available to sole practitioners.
It also allows them to spend a little bit more time away from the office doing other things. Both the new partners, and four other members of their staff recently completed the Three Peaks challenge. They set their sights on an ambitious target, aiming to raise £25,000 for the Rainbow Trust. With sponsorship from Fidelity Funds Network and with some sponsorship pledges still to come in, they are confident of getting very close to their target.
Born: Kirkuk, Iraq 1957
Lives: Shalford, near Guildford
Education: Fort Augustus Abbey School and Kingston University (Business Studies)
Career: 1976-86 – Commercial Union
1986-to date Milbourne Financial, now HFS Milbourne Financial
Likes: Travel, sport and keeping fit
Dislikes: Inefficient insurance companies
Drives: VW Golf
Book: Longitude by Dava Sobel
Film: The Shawshank Redemption
Album: Coldplay X&Y
Career ambition: To make HFS Milbourne one of the UK’s top 50 IFA firms
Life ambition: To achieve a perfect work/family life balance and to stay fit and healthy
If I wasn’t doing this I would be…A management consultant or similar
Born: Weybridge, Surrey, 1957
Education: Rydens Comprehensive
Career: 22 years as IFA, own business
Drives: Lexus GS 300
Book: On The Road by Jack Kerouac
Film: LA Confidential
Album: Pet Sounds by the Beach Boys
Career ambition: Be happy
Life ambition: Be happy
If I wasn’t doing this I would be… Happy somewhere else