Financial advisers set to expand

The private equity-backed business is well placed to capitalise from significant demographic and regulatory changes which are set to shake up the wealth management industry.

UKWM wants to act as a consolidator in a fragmented market of 11,000 firms when sweeping reforms hit the sector in 2013.

Demand for investment advice is expected to soar as the wealthy post-war generation of Baby Boomers reaches retirement and the Government scales down public pension provision.

Duke Street, the venture capitalist, beat rival bidders to buy a majority stake in UKWM in March and is providing the war chest for acquisitions.

Lynn Coleman, the chief executive, told the Yorkshire Post: “We are actively engaged in acquisitions that will give UKWM a national footprint.

“We will move from a Northern firm with a very small Midlands presence into a firm that has ambitions to operate nationally.

“A lot of those conversations are well advanced.

“We have been approached by a number of firms that would like to join us.”

UKWM, which has offices in Leeds, York, Pontefract, Macclesfield and Rugby, is expected to complete at least one acquisition in the coming months.

The firm provides specialist investment and tax planning advice to high net-worth individuals and employee benefits advice to organisations and trustees.

It manages around £1.4bn of private capital and also advises on corporate pension funds. Turnover in 2010 was £8.5m.

The Financial Services Authority’s retail distribution review (RDR) is forcing big regulatory changes on the market for independent financial advisers in an effort to protect consumers.

From 2013, firms will have to charge fees instead of taking commissions, advisers will have to pass exams and firms will have to declare ties to providers, sacrificing their independent status.

Commentators believe that companies with secure, recurrent earnings and the scope for expansion will be the main beneficiaries.

Ms Coleman said that UKWM moved away from upfront high levels of commission in the 1990s.

She said that the group has a “significant” level of fee-based and recurring revenues and so is not exposed to any reductions in income that RDR proposals will bring.

“We have a very highly qualified advisory sales force, we are RDR compliant now,” she added.

Ms Coleman said that Duke Street’s backing will be used for “genuine real growth”.

She added: “They could see that having bought UKWM the investor capital would be used in genuine value creation rather than underpinning and supporting the day to day ongoing business here.”

The market for financial advice is expected to grow due to the large number of retirees with funds to invest. An ageing population and a move towards private pension plans and auto-enrolment will also drive demand.

Ms Coleman joined UKWM in January 2010. She was headhunted from the Co-operative Group, where she led the 120-strong IFA arm.

The industry veteran started her career at Royal Insurance in Liverpool and has had spells at Yorkshire Building Society, Bradford & Bingley, Norwich Union, where she was marketing director, and Saga at Folkestone.

She said: “I could see the opportunity for a well-funded acquiring firm as we approached RDR and I was aware of Yorkshire Investment Group, the advisory firm of UKWM, and its reputation and the ability of its advisors.

“I knew the potential of this firm was such that, if they had the right financial backer approaching RDR, that they were one of the firms that other chief executives who were considering where their firm should go would naturally gravitate towards.

“When I came in and saw the opportunity it was clear that they did have all the building blocks.”

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