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Consolidator rejects firms over adviser charging

Consolidator rejects firms over adviser charging

Advice consolidator AFH has said it would steer clear of buying firms where the charging structure suggested there would be a clash with its values.

AFH chief executive Alan Hudson said the Aim-listed business was seeing "no slowing up" in the number of potential acquisitions and he predicted the pace of consolidation across the advice market would only get faster.

In recent months AFH has made a number of changes to its proposition with the aim of reducing costs to its clients.

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Earlier this year it revealed it had reached deals with six fund management companies to run segregated mandates on the company's behalf, which, he said, would provide savings of between 15 and 22 per cent. The firm has also removed platform costs for its clients.

Mr Hudson said: "If we saw a business that, for example, was charging 100 basis points on an ongoing basis and the only service they provided was an annual valuation and access to an adviser, and if they were not managing the money themselves, that would tell me they were not right for us.

"That firm is struggling to demonstrate they are adding any value whatsoever."

Mr Hudson said since AFH had set out its plans to save money for its clients, it had been getting "far more" enquiries from advice firms interested in being bought out.

The first two weeks of September saw AFH close four acquisitions and during 2018 so far the company has bought 13 firms across the UK.

Mr Hudson said: "We don't see any slowing up on the inorganic growth. We have got a really good pipeline of deals. The pace of consolidation is getting ever faster."

He said AFH's experience on acquisitions allowed it to go through the process more quickly and easily than some other firms, but said he was also mindful of the fact the company needed to treat each firm individually.

Mr Hudson said: "We are very mindful of the fact that if we are doing a deal for the thirteenth firm of the year, that individual is doing it for the first time so we do hold their hand through the process."