Manchester-based Castlefield's founder John Eckersley is moving into the role of chairperson in the autumn, subject to Financial Conduct Authority approval, amid visions of doubling the company's assets under management over time.
The shift in senior management functions means that Eckersley, who set up the business in 2002, has been considering the best possible succession plan for the team and how to help the company grow by selective acquisition.
He told FTAdviser: "I am going to move into the formal role of chairperson in September, subject to FCA approval, which does have an SMF attached from an FCA point of view.
"I have a great senior team who are all responsible for different areas of the business and I have been working out my next steps while I am chairing the company board.
"I believe in succession planing for the whole team; replacing a founder with a single person is difficult but I'm not going anywhere soon.
"I don't need an exit personally, and I want to devote time for the next few years to get to know people in our sector, nurture existing relationships and see if we can make a strategic acquisition."
You can't force the pace on strategic acquisitions.John Eckersley, CastlefieldHe said one of the big issues in the wealth planning sector was the continued merger and acquisition activity, often times carried out by non-UK private equity companies.
"Financial services seems to be on a conveyor belt of acquisition after acquisition. It's like a fish being eaten by a bigger one, and that being eaten in turn.
"Private equity is a massive fish in this chain - and you see billions of pounds ending up under management but what does this mean for the consumer? What does this mean for client choice?"
It is understood there are approximately 15 active consolidators in the UK market with private equity backing with high multiples.
"Yes, the multiples can be phenomenal but any acquisition that involves end clients has to be based on what's best for the client?", Eckersley asked.
He admitted the company was "always being courted by people who are talking about strange multiples - but you cant have 'x multiple' and expect to continue doing what you are doing well for the clients."
Getting the right fit
So how will he go about finding the right potential purchase in the next stage of his career?
"It's hard to get the transactions right all the time but I have a lot of experience", he said, referencing the fact he has more than 30 years' industry experience under his belt.
"You can't force the pace on strategic acquisitions. It has to be the right company with the right fit and they have to meet each one of our core values", Eckersley added.
Castlefield's values are:
- Diversity
- Equal opportunities
- Environmental impact
- Commitment to recycling
- Training and development
- Health and Safety
- Giving back.
While the company is always speaking to companies who might be interested in selling, Eckersley said it was not something Castlefield was prepared to rush into.
"We are always interested in the right individual and the right business. In fact, I would like us to be almost like a consolidator in the ethical and sustainable space. We are the logical home for such businesses - we really are.
However, he said he does believe the company could double its assets under management, which are approximately £400mn. The founder said: "Let's say we could acquire another £400mn which is out there in the hands of three or four firms that we could talk to."
Background
Eckersley spoke of how, while he was at Brown Shipley, he "had an itch to go work for myself - an itch I was able scratch and to leave on good terms.
"I had a strong desire for responsible investing and I wanted to focus on the charity clients that I had fostered over the years."
Originally, his stake in Castlefield was 50 per cent; another colleague had 25 per cent and 25 per cent was owned by a charitable foundation.
Now, approximately 47 per cent is in an employee share ownership trust, 26 per cent owned directly by employees and 21 per cent by the foundation.
He strongly believes in the principles of 'HAWD' - telling everyone in the business 'How are we doing?", which is important given how many employees have their interests aligned with those of the business.
We've got the Prod-style segmentation down pat.EckersleyThe company has been on selective acquisitions in the past. In 2011, as FTAdviser's former sister paper Financial Adviser reported at the time, Castlefield bought Gaeia, and then purchased Barchester Green in 2014.
It currently has approximately £401mn in assets under advice.
Approximately £223mn of that money has an advisory relationship attached to this, and 75 per cent of that (£167mn) is within Castlefield's own funds.
"Clients come to us for their needs, and that might be one-off advice, or ongoing advice, or investment management.
"We've got the Prod-style segmentation down pat. And we send all our advised clients an invoice every year to show them what they have been paid for and remind them what we can offer."
The discretionary management fund size of the business is also growing. The company has approximately £345mn in DFMs and 15 people working on this side of the business.
He said the investment management side of Castlefield works hand-in-hand with the financial planning side in terms of the commitment to those seven principles.
Eckersley added: "Obviously we have done a lot of thinking about this.
"We offer values based-investment products and advice on one hand, but we also hold ourselves to account as a values-based investment business.
"It's not just a product line but what we do. You can buy an ESG fund from anyone but ESG is what we do - our principles are embedded in our people, and clients really get that."
