True PotentialSep 14 2021

True Potential PE backers 'attracted by consolidation'

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True Potential PE backers 'attracted by consolidation'
True Potential chief executive Daniel Harrison

True Potential's chief executive has told FTAdviser the company's new private equity backers don't intend to shake up its business plan and were attracted by the consolidation in the advice sector.

Daniel Harrison said Cinven, which paid an undisclosed amount to become True Potential's majority shareholder, was backing the company to help it hit its plans and was keeping the existing management team in charge.

He said Cinven was particularly eager to grow True Potential's assets under management - both on its platform and in its discretionary portfolios - and was keen to help the company work better with the 30,000 clients it has a direct relationship with.

Harrison said: "I think Cinven are really attracted to the way True Potential is growing. They see further consolidation in the market.

"They have some exposure in the financial services sphere. They agree with our read on the market. We are due a bit of consolidation, there is a bit of fragmentation with a lot of smaller directly authorised firms.

"That’s what Cinven believe and that’s what they have signed up to with us."

Harrison said Cinven was willing to provide more "financial firepower" if True Potential feels it can exceed its existing plans.

He said: "The only question [Cinven] really had was could we recruit even more in 2022 than we did in 2021.

"We’ve recruited 280 advisers since this time last year so they are obviously looking at demographics in the market, looking at the adviser population aging and a dearth of advisers coming in.

"The conversation we then had was 'not a lot'. We have quite a high bar to jump for advisers to join us at True Potential. We only want to work with high quality advisers and high quality clients.

"Advisers have to agree to work in the True Potential way. We insist they do use the technology and that can be a bit alien to some advisers out there, which is fine.

"Cinven’s obvious question is 'how do you get more advisers in?' but they understand the approach."

The minority shareholding remains in the hands of 83 True Potential members of staff, five senior partners and around 400 adviser shareholders.

The deal also means the company's charitable arm - the Harrison Foundation - will receive a funding boost as it held shares in True Potential.

Harrison said this would amount to "millions of pounds" to the charitable causes it supports on issues such as social mobility.