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.
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.
