’No one owns the client’, Succession’s Chamberlain
Succession chief executive talks to FTAdviser about the “mother of the RDR” and why competitors fail when consolidating.
Simon Chamberlain, chief executive of Succession, has been in the financial services industry since 1988 but really came into his own following the 2003 launch of Thinc, “the first multi-distribution platform” in the market.
In 2003, Mr Chamberlain was working as development and recruitment director for Zurich in the UK. However, they parted company when Zurich “refused to go in a particular direction, which of course they are now, but it is seven years too late for me”.
This followed the launch of CP121 by the Financial Services Authority. CP121 was the “mother of the Retail Distribution Review”, which ended polarisation.
“Effectively the FSA bottled one piece of legislation at that point, which was making IFAs fee-based. In 2003, they broke up polarisation which meant that different kind of advisers could work for the same firm for the first time. They were going to make all IFAs go fee-based but they got lobbied hard at the time by Aifa so they brought in the menu system which meant that IFAs could still charge commission but they had to give clients the choice and, ever since 2003, they have been trying to get back to that original position and that’s where the RDR came from.”
Mr Chamberlain set up the Thinc Group to create the “first multi-distribution platform which meant that the firm ran much more like a law firm”.
He emphasised that he wanted specialist advisers so when clients came in they would see a different adviser for mortgages, a different adviser for general insurance as well as fee-based wealth managers.
“If you went to a law firm and one person said they could do everything, you would be horrified. I was pretty convinced that advisory businesses in the UK had to become more like that and so I set up Thinc in 2003 and by December 2006, two and a half years later, the company had grown to 900 advisers and 60 officers. People wanting to be part of a capital plan as one of the big problems with IFAs in the UK is that there is no route to achieving capital.
“IFAs have proven for a long time that they can make income but they have struggled to capitalise income in a meaningful way.”
In December 2006, Mr Chamberlain was approached by Axa as they were interested in buying the firm.
“We had borrowed £35m to buy 42 IFA firms and 900 advisers that created Thinc, and we were approached by Axa to sell the company, which for me was far too early as the company had only been going for two and a half years, but we had built the business on debt so we could maintain the equity.
“We decided to sell on the basis that it would repay all of the debt and we are probably the only IFA in history to repay all our debt. Certainly it created a capital event for all the shareholders and all the advisers were in a strong position going forward. I left the company in July 2007 and we still had exactly the same board as we started with.”