Colin Taylor has big ambitions for his company Key Retirement Solutions.
What started out as an offshoot of Hambros, with nine members of staff, has now grown to 240 employees with 70 advisers, and 30 support staff.
But Mr Taylor, its chief executive, does not want to stop there. He wants to be the go-to financial services company for anyone middle aged.
He said: “I want to be established as the leading over 50s company, whether they go for mortgages or pensions. Rather than being seen as just the equity-release player, we want to be seen as the over 50s player.”
Currently Saga dominates the older age market, he said, but the problem is that their market is getting older. Mr Taylor said: “If a 50 year old receives a letter in the post from Saga they throw it in the bin. We want to take that 50-year-old market and treat people as they are because at 50 they’re not old.”
As a consequence, KRS has been branching out into product development and for several years it has been operating as a lender since 2007 under the more 2 life brand. It offers an equity-release product for impaired life individuals, including a guarantee to protect children’s inheritance. It is soon planning to offer a fixed-term annuity, which Mr Taylor said would be more flexible than other options currently on the market.
He said: “We think fixed-term annuities are a huge market at the moment. We think with annuities being in the gutter, that’s what our customers need and what we’re looking at is a product that is safe and that clients can understand.
“It won’t be a traditional life company annuity, so even though other fixed-term annuities are underwritten by life companies, these won’t be; these will be more flexible than the present. We will fund it through different organisations; it will be an investment bank-type arrangement.”
But it is not just growing organically that features in the future at KRS. Mr Taylor wants to grow by acquisition and hopes to get his 240-staff number up to 500 by 2016. To help him get there, he has just done a deal with Phoenix Equity Partners, a private equity firm, which has just bought out the majority stake owned by Cabot Square Capital, the second private equity business involved in the company.
Phoenix has put £35m into the business, partly to pay for the stake, of which it owns 60 per cent, while the rest will go into the company – making acquisitions and developing the firm. Mr Taylor has a 20 per cent stake in the company.
Phoenix has the ability of getting companies to “stage 3”; of building the business to a large enterprise, according to Mr Taylor. Is he thinking of something similar for KRS? “I think in three to five years’ time that will be on the cards,” he said.
KRS was set up 14 years ago by Mr Taylor and three of his current directors under the auspices of Hambros and its Countrywide brand, which was keen to get into this market. After a few years, in 2004, Mr Taylor decided to do a buyout, initially with backing from Anglo Irish Bank and, in 2006, with capital from Cabot Square Capital.
But one of the biggest challenges for the company is to convince people of the benefits of equity release. According to Mr Taylor, this is still something of a problem. He said: “There are so many urban myths – that clients can lose money, that there won’t be a property for their children, but it’s a rolled-up interest you can actually guarantee, with an inheritance if you want. People don’t realise that it’s a lifetime interest rate of 5.6 per cent.”
However, nothing in life comes for free, he added, including paying compound interest across the lifetime of the product.
He said: “You can’t have anything else; you have to have it that way. If you have a loan, it’s always compound interest. There’s no such thing as a free lunch; there’s going to be interest on interest, otherwise it won’t be financially acceptable. We would be out of business.”
Mr Taylor started out as an air-traffic controller, first for the RAF and then the Civil Aviation Authority. He then moved into financial services, joining Colonial Mutual as a branch manager, before becoming its area director. Mr Taylor was then hired as a financial services director for an estate agent, followed by a period at Countrywide Assured Retirement Services as sales director.
It has not all been plain sailing at KRS, not least because of the financial crisis, which affected lenders especially.
In 2007, when he launched the more 2 life mortgage product, he set up his funding line with Lehman Brothers. When the investment bank went bust, the company had to take the funding line onto its balance sheet. He said: “We all had hairy moments in 2008 because the whole financial market crashed. I can’t say with my hand on heart that my throat didn’t choke.”
In 2008, the company had to lose 10 per cent of its staff and it spent money only where there could be productivity gains. In the first quarter of 2008, the company lost £1m but by the end of the year it made £500,000.
For the future of equity release, Mr Taylor said the Equity Release Council, the trade body representing the industry, could do more. He said: “The ERC needs to do more public engagement rather than talking to politicians. It was set up with the prime purpose of getting the message to the public.”
For the forceful Mr Taylor, it is a message that may get through eventually.
Melanie Tringham is features editor of Financial Adviser
Mr Taylor’s career ladder
2009 – present
Key Retirement Solutions Group, chief executive
2004 – present
Key Retirement Solutions Group (management buyout from Countrywide Assured), managing director
2001 – 2004
Key Retirement Solutions (part of the Countrywide Assured Group), managing director
1998 – 2001
Key Retirement Solutions, (previously Countrywide Assured Retirement Services), sales director
1993 – 1998
Taylors Estate Agency Division, financial services director
1988 – 1993
Colonial Mutual, area director
