How you can best position your firm for a buyout

Glen Belcher set up Hampshire IFA Avalon in 2009 as a one-man band operation, but has since come to believe that one-person advice firms are becoming less and less tenable.

Starting out with 20 clients and £2m assets under management, Mr Belcher grew the business over a couple of years to the 110-client, £7m to £8m AUM practice it is today. Originally a general practice, the firm now specialises in personal pensions, corporate pensions and investments, for people with at least £30,000 to invest and aged anywhere between 45 to 70.

However, with the cost of regulation going up and the volumes of required paperwork increasing all the time, Mr Belcher finally decided it was time to look for other options.

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“The cottage industry is slowly coming to an end. Pooling the resources of people with expertise across the industry with the same work ethic was a stronger unit. I realised this about two years ago.”

He has now merged with another company - very specifically not a network - called Prosperity, founded in 2010 by former Edward Jones’ employees and currently on the hunt for potential acquisitions.

“Even before the RDR people were retiring, older people didn’t want to take their exams and people were looking to get out of the industry.

“How do you get to have a client business where you are expected to service them but you sit behind a desk pushing paper? The problem was how do you maintain profit.

“If you invested £100,000 with a client initially you would have a contractual agreement and we would be obliged to contact you once a year and do a review on your portfolio. Let’s say you have 100 clients with £50,000 and you were taking 0.5 per cent off of them a year, you would not be able to make any profit.”

It has taken eight months of “getting to know each other” and Mr Belcher has had to make his single member of staff redundant in the process, but the merger has finally completed.

Mr Belcher hopes Prosperity’s resources and technology systems will free up his time.

“They have a process whereby all the adviser needs to do is go out and see the client, do the fact find, do the initial meeting and put it on a computer that’s picked up by admin staff who use the information to come up with research and make the recommendation.

“They produced the report and when we go back to see the client with the report we have a reason to charge them a fee. It’s a joint discussion between me and the researcher. If I agree with it It can progress.”

‘You have to kiss a lot of frogs’

Justin Randall, head of operations at Prosperity IFAs (also based in Hampshire), says Glen is the fourteenth of 15 advisers to join the relatively young company, most of which came onboard in the last 12 months.