“Handelsbanken and Cazenove [latterly JPMorgan Cazenove] gave me solid experience in all aspects of international corporate finance, including M&A and insight into the financial services sector, all of which I am putting into practice at Imas Corporate Finance,” he said.
A brief stint at Kaupthing Singer & Friedlander in 2008, having joined only six months before it collapsed, also gave Mr Hanssen first-hand experience of the vulnerability of financial institutions. Coming to Imas soon after in 2009, he sought to bring his skills to the broader base of IFAs, wealth managers, investment managers and trusts, as well as other intermediaries, particularly focused on the UK financial services market.
He said: “Albeit a time of extreme uncertainty, 2009 was a great opportunity for me to join the firm: the turbulent state of the financial markets following the largest failures of financial institutions for generations and the prolonged global financial crisis have prompted major reviews of strategic priorities by most boards across the financial services industry that make this a very interesting space in which to operate.”
The key development in this regard, he said, has been prompted by the retail distribution review which, by forcibly migrating the IFA business from one driven by arbitrarily-set commissions to one based on a more rigorous fee-based structure, has established a uniquely fluid business environment for the UK’s financial advisers.
He said: “In broad terms, the clients are now happy, the FCA is happier, and the IFAs are not happy at all in general, with many smaller IFA businesses now looking to either sell-up entirely or to consolidate their operations with a bigger player, often on a regional basis.”
More specifically, he added, the new RDR-shaped IFA marketplace has become one in which the vast majority of IFAs have become more selective about the clients that they spend time on, identifying those who are the least profitable – if at all – for a downscaling of service, not least because of the FCA’s guidance aimed at IFAs increasing their capital bases.
He said: “In today’s operating environment, if a firm can’t earn at least £1500 to £2000 a year from a client, on top of the initial fee paid at the start of the relationship, which would translate into that client having around £200,000 in liquid assets as a starting point, then the tendency is to try to redirect them to a direct-to-consumer platform, as they are simply not economically viable for a firm to spend face-to-face time with.”
Having said this, the client segment above the £200,000 liquid assets point does not provide IFAs with an unobstructed business opportunity, he said, as many of the bigger financial providers are increasingly zeroing-in on this customer segment in a more direct way, especially through the development of platforms that are broadly more technologically advanced than those of the average IFA.
He said: “There is no real reason why the likes of Standard Life, for example, or any of that scale of provider, cannot just come into the traditional IFAs’ space, and cause some serious damage to their businesses, especially at the lower end where clients can be dealt with by increasingly sophisticated technology offerings.”
As an adjunct to this, he added, a further advantage for the big financial players, of course, is that they can afford to utilise the very latest technological offerings for their online presences, even if their internet-based offerings run at a loss, as they can be written off effectively as loss-leaders for more value-added business at a later stage.
Despite this, though, he does not hear the death knell for the smaller IFAs just yet, or even within the next five years or so, as he believes that there is scope for a reasonably-sized IFA – he referred to 10 to 15 advisers as being a decent minimum in this regard – to occupy their own niche positions in the market.
“Many investment managers will be unwilling to get involved in the IFA space for three reasons: first, culturally, they are often very different from IFAs who tend to be more individual client-focused while investment managers typically deal with a broader client base; second, investment managers obtain business from a load of IFAs, and if they buy one outright then this might marginalise business flows from the others; and third, they could face regulatory implications on the nature of the advice given to an IFA’s smaller clients.”
It may also prove to be the case that, given the recent swathe of scandals involving some of the bigger names in the financial business (PPI perhaps most notably for the general population), many IFAs do not wish to be associated with the bigger brands in the world of finance, he pointed out, while building up a new brand – in the manner of Hargreaves Lansdown, for example - can be a tortuous, expensive, and extremely drawn out process.
Instead of this model, Mr Hansson referred to the increasing likelihood of IFAs looking to vertically integrate their businesses in order to keep the integrity of their face-to-face business intact while also using the economies of scale of a bigger operation.
He said: “This is a perfectly organic way of building this IFA business out: firstly by building up the face-to-face very personal service, then by rolling out a new platform or improving on an existing one, then by looking to enter into some sort of agreement with another similar firm, and then liaising more closely with one of the bigger investment managers to secure the best of all worlds.”
Simon Watkins is a freelance journalist
Career ladder
2009 – Present: Imas Corporate Finance (mergers & acquisitions in the financial services industry)
2008: Kaupthing Singer & Friedlander (mergers & acquisitions and equity capital markets advisory work)
2000 – 2008: Cazenove/JPMorgan Cazenove (mergers & acquisitions and equity capital markets advisory work)
1992 – 2000: Handelsbanken Investment Banking (mergers & acquisitions and equity capital markets advisory work)
1988 – 1992: Touche Ross (auditing, accountancy and consulting)
1985 – 1988: Durham Univserity (Honours Degree: Economics)
