The owner of M&A consultancy Scydonia – and trainee rugby coach – tells Myron Jobson that many advisers selling up are more concerned for the well-being of their client base than making a quick buck
It is not all about the money for financial advisers taking the plunge and selling up shop to wealthy adviser conglomerates, according to Innes Miller.
Client welfare tops the list of priorities for planners when it comes to selling their business, Mr Miller added.
“Some advisers have had the same clients for between 20 and 30 years and are probably well-known in their local community.
“If an adviser sells out to a company that almost immediately hikes the amount that their client would be required to pay for advice, the adviser would probably not want to walk down the high street or go to the pub at the risk of bumping into people who were their clients and are now worse off”
Scydonia is a consultancy firm that provides business advice to financial advisory and wealth management businesses, as well as offering merger and acquisition services.
The latter is aimed at whipping advisory firms earmarked for sale into shape to maximise its value over an agreed timeframe.
Consolidation is the zeitgeist in the financial advisory sector as regulatory pressures, legacy trail commissions – not least the ever-complex investment sphere – are driving smaller advisory practices to the brink of their capabilities.
To cope with these challenges, smaller practices should tailor their proposition to serve their target market, Mr Miller said, adding: “If you are serving a client bank with a further range of needs and you are a small business, then you are effectively faced with two choices.
“One is to invest in the business and bring in people and the resources and capabilities that allow you to meet the needs of these people. The second is to sell up and work for somebody else with these resources.”
Weighing into the restricted versus independent debate, Mr Miller said more advisers were likely to adopt the former advice model because it removed the burden of providing whole of market coverage to the regulator at a time of heightened regulatory scrutiny – with MiFID II on the horizon.
He added: “The whole debate is a bit of a red herring to be honest. From a client perspective the most important thing is the quality of service that is provided. Being restricted does not detract from that in any way.
“As we are seeing greater cost pressures on firms, also from a professional indemnity perspective, more advisers will ask themselves: do we really need to be independent? It is about being able to take a step back from the emotional attachment to the independent status and trying to look at the situation in the cold light of day.”
Mr Miller has had a long-standing career in the financial advisory consultancy business.