Foster Denovo to buy firms to find quality IFAs

Foster Denovo to buy firms to find quality IFAs

Foster Denovo is on the hunt for firms to acquire as it has struggled to individually hire quality IFAs to swell their ranks.

Chief executive Roger Brosch said he was in talks with five or six firms, and the business was in a strong balance-sheet position to make acquisitions.

Mr Brosch said: “We’ve had three new joiners this year and three more in the process of coming on, so in terms of recruitment I think we’re similar to the rest of the market.

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“We’ve also invested in our adviser academy, which is expensive but worthwhile.”

In 2014 the number of advisers at Foster Denovo dropped from 90 to 76, according to its annual accounts, and in November and December it lost another two, despite pledges to get a recruitment drive under way in 2015.

In January, the national firm made director of compliance Jane McTigue redundant, but confirmed that four new advisers had recently joined.

Martin Tuttlebee came through the academy programme to be authorised in early February, while Adam Rideout, Martin Hellier and Nick Oram have also joined the business since the start of 2016.

Mr Brosch also said he was looking to grow the business via strategic partnerships, with pitches in the works for seven or eight such ventures.

At the start of the year, Foster Denovo followed a retirement advice referral deal with Friends Life by going into partnership with professional services group Optionis.

He pointed out there were few firms that could give both corporate and individual member advice, with many corporate advisers struggling to transition from commission to fee agreements.

He said: “I think there is going to be further consolidation in the corporate advisory market and we’re going to take full advantage of that.”

Phil Morris, head of distribution at Gale and Phillipson, said that he agreed it was sometimes necessary to acquire firms to bring on experienced IFAs, having recently been attempting to recruit for its own Newcastle and London offices.

He added: “For the cost of finding and recruiting IFAs through recruitment consultants, it is sometimes worthwhile spending money on acquiring an IFA business, as you know that they already come with an established client bank, generating income from day one.

“Other issues are that the IFA industry is not recruiting enough graduates or trainees to the profession. Graduates of financial services degree courses tend not to go into advice-based positions, but instead into research or technical posts.

“Furthermore, as the banks have withdrawn from financial advice over the years, the recruitment ground for new IFA entrants has been reduced,” he added.