Solomon Capital Holdings, the private equity-funded wealth manager set up by ex-Intrinsic chief Andy Thompson, has signed two IFA deals in recent months worth more than £760mn in assets under advice.
At the end of last year, Solomon bought FA92 - a Sherborne-based IFA with 22 advisers and about £360mn in assets under advice.
Then this month, the consolidator bought a minority stake in Kent-based advice firm Beaufort Financial Westerham, which employs seven advisers and oversees some £409mn in assets.
The more recent minority stake deal is the first of its kind for Solomon, which has until now bought companies outright.
With a minority stake model, the consolidator is hoping to attract more advisers who are keen to profit from their firms’ growth.
In the long term, Solomon intends to buy up bigger shares in these firms until it is a majority owner.
Beaufort Financial Westerham marks Solomon’s fourth deal in six months. Excluding its most recent deal, Solomon’s assets under advice sit at £3.1bn.
Last year, the consolidator bought Beaufort Group and Gale & Phillipson. These two acquisitions laid the foundations for the consolidator’s ‘hub and spoke’ model.
FA92 was Solomon’s first ‘hub’ deal, with Beaufort Financial Westerham becoming its second.
The firm’s vice chairperson, Simon Goldthorpe, told FTAdviser he is keen to grow IFAs under the Solomon umbrella via a partnership versus acquisition model.
You shouldn’t be losing clients due to the process [of consolidation].Simon Goldthorpe, Solomon“This seems to be resonating with a number of firms,” he said. “It’s the best of both worlds. You’ve got the M&A facility, and then the adviser businesses which sit separately alongside that.”
One thing Goldthorpe wants to avoid is a drop in service levels, and therefore attrition rates, at the firms it acquires stakes in - whether they are majority or minority holdings.
“That’s why we’re keeping administrative staff in place, as well as the management team. You’ve got to keep doing what the client likes. You shouldn’t be losing clients due to the process [of consolidation],” said Goldthorpe.
The plan is to grow to 50,000 clients fairly swiftly, with a view to acquire up to 10 ‘hub’ firms - either outright or in part.
“We’ve got a good pipeline of hub deals. We’ve built it faster than we’d hoped. We’re about halfway down that road and we’ve got some huge deals still to land,” said Goldthorpe.
The consolidator now counts more than 100 advisers across its hub and spoke model, which sees hub firms make their own acquisitions - otherwise termed as ‘spoke’ deals.
This means roughly 13,500 clients sat under Solomon before it took a minority stake in Beaufort Financial Westerham.
Having spoken to a number of firms, Goldthorpe said there is a vast difference in how firms approach customer referrals, with many not properly measuring their referral volumes or how they come about.
“It ranges from a £25 referral voucher to a £250 voucher and a hamper at Christmas,” he said.
“The reality is advisers are quite different. But there are clear opportunities for organic growth here…Many firms don’t have a proper marketing plan. If we can help them localise it, there’s some big opportunities.”
ruby.hinchliffe@ft.com
