Octopus in talks to back 5 advice firms with funding and tech support

The accelerator will be funded by Octopus Capital, but the group is still in the process of allocating a pot of cash.

“We’re not raising a fund,” Daniel Marsh, head of Adviser Accelerator told FTAdviser.

Similar to how it invests in Seccl, a firm it acquired for £10mn in 2019 which allows advisers to own their platform technology, Octopus plans to drip feed funding into advice firms as and when they need it.

“I’m excited to add real value to a small number of firms,” said Marsh. “We don’t know how many firms we’ll back yet. But it certainly won’t be in the hundreds.

“In terms of where we are with the business at the moment, we do have somewhere between three and five firms which we are in quite advanced discussions with.”

The accelerator will focus on entrepreneurs who want to continue to own and grow their advice firms under their own brand, particularly those keen to close the advice gap through technology.

The intention is to also hire the accelerator’s own chief technology and product officers who will go into advice firms Octopus invests in to help them scale, so the advisers can focus on providing advice.

There's always a danger in starting off with almost a collage of things that you want to put together.Daniel Marsh, Octopus

Much like Octopus Ventures, another of the group’s businesses, Marsh envisages the group will invest in these firms over the next 5-10 years before reassessing its position.

“We might buy the whole [advice] business or exit our investment,” said Marsh, echoing Octopus Investments’ chief executive, Ruth Handcock, who told FTAdviser the group would not rule out an advice firm acquisition.

“Part of our gain here will be taking a stake in the business and growing it in value. It makes sense as an investment.”

Asked whether firms onboarded to the accelerator will have to migrate their customers to Seccl, Marsh said: “We’re yet to decide how Seccl will feature exactly. It’s less about the custodian, and more about the technology.”

He added: “But for me, there's always a danger in starting off with almost a collage of things that you want to put together. We want to start with the problems these firms are trying to solve.”

Octopus has already had a handful of conversations with advice firms which decided they did not want to enter the accelerator. “Some firms decided they aren’t a fit, and that’s totally fine," said Marsh.

Over the past two years, Marsh said he and Handcock have spoken with more than 80 advice firms to understand what they need help with.

“These are successful businesses with NPS ratings of 90-95 per cent. What they’re struggling with is scaling. 

We’ll keep listening to advisers for years.Daniel Marsh, Octopus

"It’s partly securing the capital, because recurring advice fees are not seen as a reliable income source by some lenders. 

"And for those lenders that do, they want to lend to businesses on their terms - such as buying the business and making it part of their platform management position and brand.”

These challenges, paired with system inefficiencies and a lack of in-house talent, form the fundamental building blocks for Octopus’ advice accelerator.

Marsh has been at Octopus for eight years. He started out in the tax team, before launching a lifetime mortgage business under Octopus Lifestyles which was later sold. 

He then helped launch Octopus Wealth, a high-net-worth advice business, and oversaw the acquisition of Seccl which he ran as head of customer for more than two years.

“We’ll keep listening to advisers for years,” said Marsh on the accelerator’s future trajectory. “I hope we’ll never stop. If we do, we’re probably failing.”

ruby.hinchliffe@ft.com