“My parents moved to the Isle of Man, then Cyprus for a year and a half, then back to the Isle of Man, then Devon, Cornwall, Scotland. They were serial entrepreneurs. It was always inevitable that I was going to go into business for myself as I did not understand what it was to be an employed person.”
Bradbury is now managing director of London IFA Bradbury Hamilton which he set up in 1993. Like many in the industry, however, he did not move straight into financial services. After graduating with a degree in economics, Bradbury started his working life as a trainee accountant. “I did my first set of exams and after about 15 months, the excitement was too much for me,” he jokes.
He was keen to get into stockbroking and responded to a likely advert in the FT but it turned out to be for pre-FSA brokerage firm The Porchester Group, which later became the MI Group.
The move from the world of accountancy to the sales culture of cold-calling and commission-only was a “baptism of fire” but he remained with the company for just over five years. He then joined Berkeley Morgan which was set up by a former colleague. Two years later, he decided to strike out on his own.
Bradbury says he saw an opportunity for a different business model. With the average age of IFAs at around 54, he realised that some IFAs would be unwilling or unable to face the prospect of needing to take further exams to stay within financial services.
“I thought a lot of people would want to leave the business. Finding new clients from my experience had been quite difficult, as I had to cold call to get them. An easier way to do this was if an IFA wanted to retire. I would buy his client book and instead of picking up one referral, I would pick up 500.”
Bradbury Hamilton now employs a staff of 26, with eight RIs based in its London office. To date, it has taken on the businesses of 35 IFAs and Bradbury is keen to grow this figure further. The firm is currently turning over around £1.4m but Bradbury aims to hit £10m a year, with an eye on an eventual sale or stockmarket flotation. Bradbury says this is a big jump to make but he believes there are a lot of growth opportunities available.
In a very close parallel to the circumstances that caused Bradbury to set up his firm 15 years ago, he says the retail distribution review is putting a lot of pressure on firms without professional qualifications, particularly those with principals getting towards the end of their careers.
He expects the FSA to eventually insist on chartered or certified status as the minimum requirement of being an IFA. He predicts that the number of IFA firms will drop by a third, with the number of RIs falling significantly.
“Over the next three years, we could see anywhere up to a third of IFA firms disappearing.” He says this will not be solely due to retirements but also mergers. “Selling, retiring, merging, but the number of firms will go down. I think the number of RIs will fall as well.”
As a result, Bradbury says he is not just on the look out for retiring IFAs’ businesses. Small IFAs who are finding their profit margins being continually eroded may also find a home at Bradbury Hamilton.
“A lot of firms, particularly transactional type businesses, are finding their new business levels are falling but their overheads are static or rising potentially and they are going to find that a very big squeeze is on. This is coupled with the average age of an IFA, the RDR and initiatives like treating customers fairly, as many firms are not in a position to be able to do this.”
The ability to be acquired by Bradbury Hamilton should be quite attractive for many smaller firms, he says.
“If someone wants to come into Bradbury Hamilton as a one-man IFA, they may be making very little money under current conditions. If they sell their client bank to Bradbury Hamilton, they would be paid an appropriate amount for it but could then go on to a self-employed contract where they then have their paraplanning done for them, their administration done for them and potentially the use of an office and a phone. That cuts out their own secretarial, paraplanning and office costs.”
Bradbury says many of the problems affecting profitability for small firms are not down to a lack of hard work but are simply due to IFAs not using their time appropriately. “A lot of IFAs do not value their own time enough. Many IFAs will say they are making £100,000 a year profit but they may be working 60 or 70 hours a week. They are doing everything and are taking a lot of risk.”
He believes there is value in many firms that can be unlocked by adopting a more streamlined working model, with each employee doing their own specialist jobs. He emphasises the need to make proper use of paraplanners to assist IFAs and administrators to assist the paraplanners. In this way, everyone is employed to do the job they are best qualified to do.
“Each person has got their own speciality. The adviser should advise. They should not get bogged down in writing reports and administration.”
The RDR and general burden of regulation are causing many headaches for IFAs but according to Bradbury, for those that get their processes right and keep their eyes open, there are opportunities available.
Born: London, 1963
Education: Plymouth, Devon; BA economics from University of Northumberland
Career: 1993-present – managing director, Bradbury Hamilton; 1991-93 – Berkeley Morgan; 1986-91 – The Porchester Group; 1985-86 – Clayman and Co
Likes: Motor racing
Dislikes: A mundane 9 to 5 job
Drives: Does not own a car
Favourite book: The Godfather by Mario Puzo
Favourite film: Gladiator by Ridley Scott
Favourite album: Good Girl Gone Bad by Rihanna
Career ambition: Would like to think I had made a mark on my chosen profession
Life ambition: To be successful in whatever I do
If I wasn’t doing this I … Would like to be a politician in Government