Strabens Hall plans to carry out a hiring spree in the UK and aims to reach £1bn ($1.38bn, €1.17bn) assets under advice (AuA) in five years.
This is part of the firm’s expansion plan which is being developed and implemented with the help of newly appointed executive director Alistair Butt.
Most recently, Butt worked as an adviser and consultant to various financial services companies, and prior to that he was a founder and director at Brooks Macdonald.
International Adviser spoke to Butt about his newly established role and how Strabens Hall plans to grow its AuA from £200m it currently has today.
When asked if the business target was achievable, Butt said: “We have worked hard on the business plan, and what the business plan tells us is we have a very good opportunity to get to a £1bn under advice in five years’ time.
“It might appear to be an ambitious target and it’s going to need a lot of hard work, but I think it’s eminently achievable by hiring the right people.
“We are definitely very open minded as to the type of people that we’d hire. We have high standards when setting the criteria for financial adviser job specs, but with the investment consulting service also in the mix, it is entirely possible that we could entertain approaches from private client investment managers or, possibly even, private bankers as well.
“In terms of hires, we’ve set a target of bringing in around four client facing advisers per year. In tandem with that is a recruitment strategy to strengthen the support teams proportionately.”
In October 2019, Strabens Hall opened an office in Nice, France to serve UK expats in Europe.
Butt said that the firm hopes to “beef up” the French operation but it has to do “some targeted marketing to get a more of a foothold” in the European country.
“The key for us is the existence of the French connection, which allows us to advise EU citizens as well,” Butt said. “The Strabens Hall view is that truly high net worth people will often have a footprint in more than one country, and on that basis, very few firms can properly cater for them.”
Opening new offices
In June 2019, Strabens Hall exited Hong Kong to focus on the UK and France offices.
IA asked Butt whether the UK advice firm has any plans to open any other operations elsewhere.
“We have an open mind in terms of opening offices, certainly in Europe, for example, Portugal or Spain,” he said. “It is pretty obvious that Nice is a good strategic location, not only in terms of the wealth in the area, but also because of the opportunities in neighbouring Monaco.
“The residents of Nice and the Cote D’Azur tend to be fairly wealthy, but there may be enclaves within other parts of Europe which would also suit our operation. We have not put anything concrete into the business plan to do that, but I think sometimes these things have the habit of presenting themselves as opportunities from time to time anyway.
“The most likely scenario would be teaming up with somebody who is already operating in one of those areas, either with them making an approach to us, or us making an approach to them.
“We are open minded, but right now I don’t think we would set up an office from scratch and then try and find people to staff it. I think it is more likely to happen by a process of evolution or a meeting of minds with the right people. We will very much consider that as part of our future expansion plans too.”
Strabens Hall’s expansion plan is more about growing organically however Butt has said that the firm is “not dismissing the possibility of acquisitions” in the UK.
“I think the way the market currently stands, we will probably look at people exiting or retiring from the industry and do it that way,” he said. “I don’t think we’re in a position where we would be able to take on a large business because we’re quite a small firm ourselves.
“I think we could be in the marketplace if we wanted to make an acquisition, although it is a competitive space, there’s little doubt about that, and there is some serious ‘land grabbing’ going on for advisers throughout the entire market.
“The Strabens Hall offering is almost unique in the marketplace, and where scope might be for an acquisition or partnership would be for somebody who wanted their existing clients to be looked after by a firm of the quality, expertise and reach of Strabens Hall.
“My impression is that in the current consolidation/merger mania, there are a few businesses selling up without too much concern as to what happens to the clients thereafter. That is not the field where we’re trying to compete in, nor is that the right kind of ethos for us.
“We operate on a completely open-door policy. We welcome people approaching us, but equally there is an opportunity to approach people strategically. There is no conscious process, so we’re not hiring consultants to go and find companies for us.
“We are in a relatively small industry and you get to hear about what companies are doing, and people get to hear about what you are doing as well. My message is, come and talk to us, and whatever it might be about, we have an open mind.
Benefit from consolidation
Butt also believes that the firm can benefit from the large number of acquisitions taking place in the UK marketplace.
He said: “The substantial amount of consolidation going on is, in some cases, producing a dumbing down and commoditisation of service offerings, and has a knock on effect to the delivery to clients.
“Some clients will have entered into a relationship with their advisory and or investment firm on the basis that they’re getting a truly independent or wide ranging service. If the firm then consolidates with another firm, suddenly those clients may not be getting what they originally signed up for.
“I have been in the industry a long time, and I know that clients can often be habitual, and therefore may not question the choices or lack of choices that are suddenly placed in front of them. But I think there’s a sufficient segment of people who continue to demand higher standards and engage with their advisers for those highest standards.
“It may not happen immediately, but there may be a point in future when clients will realise that their adviser cannot provide all of the services that they want.
“The key with Strabens Hall has always been to maintain total independence, and to be available to those clients who both need and appreciate that. I believe the market is shrinking in terms of firms that can truly provide that service, which in turn creates more opportunity for those of us who steadfastly remain within it.”
One area that Strabens Hall is continuing to back in the UK market is the defined benefit (DB) pension analysis and transfer sector.
The DB market is suffering significant headwinds due to the rise in costs for professional indemnity (PI) insurance and the increase in Financial Conduct Authority (FCA) regulation, but Strabens Hall does not think the market will not be going away any time soon.
Butt said: “More and more firms are exiting from the market because they either do not want to, or cannot, get the authorisation, or cannot get the requisite PI cover.
“We still do them, and in fact we execute them for other firms as well. We try and maintain the highest possible standards and the widest possible scope of advice, and I think that wins a lot of business.
“It is an area we believe very strongly about, and whilst the FCA might appear to be making it very difficult, I believe it would be impossible for them to prohibit the process because they would ultimately be denying consumers a choice.
“It is obviously a shrinking market by dint of the lack of new DB schemes being set up. However, there are still literally billions sitting in DB schemes, and whilst it is not right that all of them should necessarily end up being transferred elsewhere, but there is always going to be a case for proper analysis for DB scheme members, and which will remain the case until the last ever DB scheme member retires or dies.
“We have a long-term legacy with DB schemes, especially in the public sector, so you’re talking about a group of people who are going to be needing advice on these schemes for the next 40 years or so.”