Corbel Partners founders Paul Heath and David O’Hara have told International Adviser that financial advice networks are the future of the industry.
This comes after the network completed four buyouts in June with the firm planning another two acquisitions for 2023.
Heath and O’Hara believe that their network will thrive as the profession becomes more complex and small firms need more support.
They said: “The bottom line is: advisers need to be able to deal with clients in a changing and complex financial world. In the last few years, there’s been an increase in the variety of products, the amount of planning required, and compliance regulations, to name but three essential processes.
“To achieve airtight outcomes, they need more support than ever. This is something that only a network can provide, especially for smaller businesses.
“For us, it’s also really important to debunk the old negative connotations around networks. Many traditional networks built a poor reputation – they limited advisers’ choices, controlled their client load, and served corporate interests over client outcomes. We’re working to reframe the narrative around networks.”
Support for small firms
Heath and O’Hara explained that networks are essential for providing support to smaller firms especially as Consumer Duty will place a significant burden on them.
“For small firms already squeezed for time, this may mean fewer hours in the day to focus on client progression. There’s also quarterly and six-month reporting, annual certification and even just the increased day-to-day administration side of things. Small firms need to increase resources and may sell less as a result of this pressure,” the founders said.
They added that networks have the resources to give advisers the structural support they need while letting them build their business.
“We believe more and more firms will need network support as the profession becomes more technical, regulatory and complex.”
Continuity of service
As well as providing firms with resources and support, Corbel Partners recently launched a members-only buyout proposition.
The network’s founders Heath and O’Hara said that the top benefit of the buyout scheme is “continuity of service”.
They said: “This scheme means we can take advisers from the ‘cradle’ – many people we work with began as administrators and are now chartered – to the “grave”, offering them a capital event at the end of their career that won’t compromise their clients’ wellbeing.
“The scheme gives firms the opportunity to work with a trusted network of likeminded individuals for their entire career; this security allows them the space to focus on making the best of their business.”
Before discussing a buyout firms want to that their clients won’t be shoehorned into a new investment solution, platform or be disrupted in any way.
O’Hara and Heath said: “Although it might sound hard to believe, purchase price is not often the top priority for firms entering our buyout scheme – it’s the continuity of service that can form a seamless transition for all clients.”
Future of advice M&A market
Speaking about the future of the advice M&A market, O’Hara and Heath think that it definitely has not peaked in the UK sector.
They said: “We’re seeing a lot of activity from private equity firms and other buyers, including American capital being funnelled into the UK market too. There are some firms who have the money to spend and are simply snapping up anything they can find, which we believe to be a high-risk strategy, especially when many of these consolidators are not independent, although some claim to be.”
Both believe that the M&A market will peak once consolidators begin to buy each other which they say is ‘only a matter of time’ as there are 70-80 consolidators existing in the UK.
“The bottom line, though, is that there will always be money in the market for good companies – so advisers need to focus on building robust firms that will last, and the rest will take care of itself,” the duo added.