The Standard Life 1825 charabanc is rolling along. After buying several high-profile financial adviser businesses – Almary Green and Munro Partnership for example – it has just made its latest acquisition with the purchase of Baigrie Davies.
Based in London and set up by Arthur Davies and Tom Baigrie 30 years ago, the three shareholders – the third being managing director, Ian Howe – decided that the only way forward for the company was to sell up.
Mr Baigrie said: “We looked at the possibility of a management buyout (MBO), and decided that the risks involved, mainly regulation, technology and the challenges of growth, were such that encouraging planners and management to take on personal debt to effect an MBO was foolhardy.
“The unpredictable nature of Financial Ombudsman Service decisions and the general running costs of the Financial Conduct Authority – these are risks beyond our control. The defence against them is to spend ever more on technology and risk management, but that spending in itself carries risks.”
Given the overheads of running the business, there is one way round that, according to Mr Baigrie. He said: “That is to have a lot of money. Standard Life has a lot of money and, crucially to us, to a commitment to the type of financial planning which is the proper fit of the high net-worth client.”
The shareholders looked at other options, namely consolidators, but decided they would not be in their best interests.
Mr Baigrie said: “Consolidators are putting lots of businesses together to get huge efficiencies for the benefit of their shareholders.
“We were looking for a home that shared the same client-focused culture, and the same values. We went through a normal process but settled on a firm that was utterly focused on the outcome of the clients and planners. I’m sure Standard Life will achieve efficiencies of scale but will achieve more through excellent financial planning outcomes than efficiencies.”
Standard Life’s mission to move back into the advice market, six years after selling its stake in adviser 2Plan and three years after disposing of its stake in SimplyBiz (it still has a stake in Tenet Group), has been met with bemusement by many in the financial advice industry – many have seen the move as a way of ensuring distribution as the sale of financial products changes.
However, Mr Baigrie did not see it that way. He said: “Standard Life sees a huge gap in the market, the same gap that the Financial Advice Market Review sought to address and close, but doesn’t look to have decided on finding a way of doing that.
“I think Standard Life feels it can deliver proper financial planning at very large scale, which is a way of filling that gap.”
Inevitably, questions arise over whether financial planners under the new 1825 banner will be encouraged or persuaded to use more Standard Life products. As it is, advisers bringing new business will have to use the Standard Life wrap.
But for Baigrie Davies, this is not necessarily set in stone. The firm currently uses several platforms, including Standard Life.
Mr Howe said he would only use the Standard Life wrap “if it’s in the interests of the client. If there are solutions that Standard Life wrap can’t offer that are available elsewhere, then that is what we will use”.
He added: “There is no shoehorning into Standard Life products, it’s always driven by what’s right for the clients. Looking at the investment proposition of 1825, it’s broadly similar to what we do at Baigrie Davies anyway.”
Mr Baigrie, who will now focus on his other business, Lifesearch, added: “There are products and products. If you are talking about an Isa wrapper, it doesn’t matter whose Isa wrapper it is. If you’re talking about a specific specialist product, then, [will we use more Standard life products?] my answer is no.”
Baigrie Davies has 11 financial planners and five paraplanners at its London office, which overlooks the Honourable Artillery Company rugby pitch in the City. Once incorporated into 1825, the Baigrie Davies name will disappear, and the disparate – successful – companies will have to blend into one, deciding on which systems and processes to use.
Mr Howe, who will have a seat on the 1825 executive committee, said: “It’s going to be very interesting and very challenging. Having top quality businesses such as ours, all committed to achieving the same aim, is a pretty good starting point.”
The idea is to determine best practice, and that given that each business comes from a different part of the country – Baigrie Davies will be the 1825 London office – the two executives do not see them as rivals.
However, one issue they have already had to confront is the question of regulatory status. Baigrie Davies operates an independent model, whereas 1825 is restricted.
Mr Howe said: “There’s a real historic and emotional attachment to independence that was forced upon us by regulation.
“The world has moved on radically, and looking at how broad a church and how wide restricted can be, the difference between the two has become a regulatory construct rather than anything that impacts client outcomes.”
Melanie Tringham is features editor of Financial Adviser
Career ladder:
Ian Howe
2006 - present Managing director, Baigrie Davies
2003 - 2005 Private client director, Advisory & Brokerage Ltd
2002 - 2003 Director, Bradbury Hamilton
1996 - 2002 Sales manager, Towry
Also
2012 - 2015 Director, Institute of Financial Planning
2011 to present Director, Serin Wealth
Tom Baigrie
1998 to present Chief executive, Lifesearch
1984 - 2004 Partner, Baigrie Davies
