‘I want to build the advice firm of tomorrow, today’

But Mark Howlett, co-founder and chief executive of Liberate Wealth, is at the opposite end of his career to that stereotype, having spent 35 years in the advice industry and twice been a chief executive. 

However, instead of embracing the sunset stage of his career, Howlett is back on the road, actively looking to the UK regions to find advice companies to acquire and grow organically from these “regional hubs”. 

On his motivation, Howlett says: “I want to build the advice firm of tomorrow. I have set up businesses, been chief executive, grown businesses, restructured businesses and sold businesses in my career.

“This is my chance to bring the skills I’ve learnt over 35 years in the industry — 35 years as an adviser — to the market. And I think the market is crying out for a change from the way consolidators act now.”

The first company Howlett created was in the 1990s, when he set up his own independent financial adviser practice. This was before family commitments sent him in search of greater security and he became an employee, embracing sales roles and eventually becoming group chief executive of Broadstone, an advice and professional benefits company.

He subsequently acted as co-chief executive of EQ Investors, before exiting that role to create Liberate Wealth in 2022. 

Money makers?

Speaking about what he feels he can do differently to the swathes of consolidators and trade buyers that have been roaming the landscape acquiring IFA businesses in recent years, Howlett says: “The first thing I think sets us apart is the time horizon. We are backed by the founders of VAR Capital, which is a multi-family office, and so can have a longer time horizon than private equity. In the case of this project, it’s 15 years.

“Because they are a multi-family office they understand what an IFA does, and basically the chief executive at VAR Capital does the same job as an adviser does.

“And in terms of how we can help the advice firms we acquire to grow, one of the things I have done throughout my career is use innovative technology in my businesses quite quickly. For example, we were using cash flow modelling back in 2006, which was considered innovative at the time.” 

I expect to do a maximum of four acquisitions a year, so it’s more about the quality of the firm than the size

VAR Capital has assets under management of £1.5bn, and the minimum ticket size to become a client is £20mn. 

When advice companies are acquired it is usually based on a percentage of the AUM. And with AUMs generally lower as a result of the declines in the  equity and bond markets since the start of 2022, this means advice companies can be bought for less than what some of the consolidators paid in 2020.

Howlett acknowledges that valuations have come down, but says this is less consequential to his strategy than it may seem. This is because he expects to do “a maximum of four acquisitions a year, so it’s more about the quality of the firm than the size, whereas some of the more traditional consolidators could do 20 deals in a year as they are trying to grow their assets quickly”.

He says a big part of the appeal of starting a new company, rather than taking another corporate role, is “the chance to have a blank piece of paper to build a new firm”.

He continues: “I am currently using office space that is owned by VAR Capital. And in the first six months, we set about recruiting a chief technology officer, and compliance and a head of operations, and a head of investments — that is part of the idea of building the IFA of the future today, having those building blocks in place now. It’s great that there are no legacy issues.”

The first company his business acquired, Ebor Financial Planning, has assets of £200mn and is part of the wider strategy to acquire companies in different regions that can be developed into hubs and grown organically. 

Next steps

Howlett says the investment management function will be outsourced until Liberate Wealth achieves sufficient scale, and the aim eventually is to operate an academy to train advisers. 

In time, he hopes the business will expand into areas such as employee benefits, and tax and legal services. He says: “Investment management may be quite a commoditised product [one that is differentiated only by price] now. The greater value is in financial planning and we will be financial planning-led, but the aim is to be a one-stop shop eventually, covering a wide range of services.”

Howlett explains that he is unperturbed by the prospect of buying a struggling IFA business, something that many other consolidators might baulk at, as he he can “come up with a plan” to fix it. He adds that one of the recurring issues he finds is around how data is stored and used in advice companies, and this is one of the first things he looks at when acquiring a business. 

The key is to talk to the adviser, not just around money but about their personal development goals, and see if we can help with that and with vocational training

He acknowledges that one of the biggest issues faced by businesses that acquire multiple advice companies is staff retention, with the constant risk that advisers — unhappy at the change of ownership — leave and take their clients with them, reducing the value of the company very soon after the acquisition. 

But he is relaxed about this, saying that the key is to have a “holistic” approach. “I have experience of doing this quite a few times in the past,” he says.

“The key is to talk to the adviser, not just around money but about their personal development goals, and see if we can help with that and with vocational training. I think with those sorts of things there are always likely to be more opportunities in bigger companies.”

Howlett continues: “Make no mistake, Liberate Wealth is a for-profit venture. But just as at EQ, I want it to reflect what I believe in, and one of those things is social mobility. I hope that is reflected in the academy, and that it attracts people who might otherwise not be in this industry, including career changers as well.”

Regulation and consolidation have upended the business models of advice companies in recent years. Many industry participants have focused on robo-advisers to be the next generation of winners, but it may be Howlett’s simpler approach that triumphs in the end. 

David Thorpe is investment editor at FTAdviser