As progressive financial planning firm Newell Palmer celebrates its 25th Anniversary, Sue Whitbread talks to Kevin Homfray, Finance Director at the group, about the business itself and how it has expanded exponentially through an effective acquisition programme
SW: Many congratulations to you and the whole team at Newell Palmer on reaching your 25th anniversary! Can you talk us through how your business has developed and grown over that time?
KH: Yes of course. Way back in 1993 when Philip Stepp, our Group Managing Director, established the business, it was just himself and one other financial adviser, Peter Bannister, plus an office manager, Fenella Bayliss. Both Peter and Fenella still work for Newell Palmer and are fellow Directors – Peter is heavily involved with the in-house Investment Committee and Fenella is Operations Director.
Initially Philip and Peter provided financial planning advice to predominantly corporate clients, but as the business grew and employed more advisers and took on more support staff, it tended to evolve into working more with personal clients as well as corporate clients.
In 1998, we started our first jointventure, linking in with a local accountancy firm to provide financial planning services to the clients of the accountants. Within the space of 5 years, Newell Palmer had established a further three jointventure partnerships.
In 2006, we decided to dissolve the joint-ventures with the accountancy practices and bought out the accountancy partners. We believed that the joint-venture model had run its course and we felt that buying other IFA firms was the way forward for us in terms of growing our business.
So, let’s fast forward 25 years. Newell Palmer has acquired over 45 IFA firms, and I’m pleased to say that there are several more in the pipeline for 2018. If we look at the numbers today, Newell Palmer has 3 offices; Wolverhampton, Bromsgrove and Nuneaton with a total staff of 118 employees, 32 of whom are directly employed financial advisers. We have 6,630 active clients and manage in excess of £2 billion in funds under advice. Our projected turnover for 2018/19 is almost £13 million and we are on schedule to achieve this, along with a 22% EBITDA.
SW: Interestingly, you’ve grown the business rapidly by making acquisitions in recent years. What has your experience of the acquisition process been like?
KH: Each acquisition is unique and will present varying levels of challenges for us. We undertake a detailed and rigorous due diligence process with any firm that we are looking to acquire. Our priority is to ensure that we can immediately take over the servicing of the clients and their investments and policies. If we don’t believe we can do this, for whatever reason, then we will not proceed with the acquisition.
As a result of our thorough due diligence we ensure that all areas of our business are ready to deal with the new clients we are about to acquire. I must add that internal communication of any forthcoming acquisition is vital to the unified onboarding of new clients.
In terms of possible future acquisition targets, these are identified both inhouse and from third-party brokers.
SW: Do you have a clear profile of the types of clients which the business wants to work with or the types of businesses you’re looking to acquire?
KH: No not really. Nothing is set in stone. I will explore all enquiries from IFAs looking to sell their business or client bank. However, an ideal scenario is when an IFA firm, with between one and three advisers and which has a loyal client base, is looking to retire or perhaps leave the profession because of regulatory or compliance demands.
Over the last few years we’ve worked hard to map our end-to-end business processes across all our departments. This allows us to track, monitor and report on all aspects of our involvement with clients. As a result of this we can add acquired clients into our business in a scalable and consistent manner.
SW: Aside from making business acquisitions, how do you find new clients?
KH: Acquiring clients and FUM is our main method of growing the business. However, we do find clients via more traditional methods such as referrals from existing clients to their friends and family, enquiries via our website and from lead generation websites such as unbiased.com, as well as selfgenerated leads from our 32 advisers.
SW: Financial planning is all about people but technology plays a big part behind the scenes. What systems do you use within the firm and how well do they work together?
KH: I and my fellow Directors believe that technology is vital to the success of our business. Way back in the early 2000s, we identified that ‘the cloud’ was the way to go. We migrated all of our back-office systems and applications into a cloud environment then to help ring fence all of our data and to put it in a single secure place. Utilising cloud technology also allowed us to put a robust disaster recovery process in place – should we ever experience a major incident such as a fire at one of our offices.
We frequently reassess our use of technology to see if we can use IT to streamline our processes, such as single keying of information; we input information into our CRM (Intelligent Office) and then from there, via third party integrations, where needed for clients we can obtain a quote and progress this through to a live policy. We have also set-up automatic valuations on lots of our client plans, reducing the burden on our administration team when preparing for client review meetings. Our admin teams can access policy details and values in seconds.
Another example of our use of technology is how our CRM automatically matches 98% of the payments we receive each month from providers – we receive between 10,000-13,000 payments. Historically this data would all have been matched individually by my accounts team.
If we can find a way to harness IT to make our business more efficient then we will investigate if it’s possible.
SW: When it comes to investment strategy, how does the business operate?
KH: Our focus is to provide whole of market, unrestricted financial advisory services.
When it comes to our investment strategy, we can offer clients both inhouse actively managed or outsourced passive solutions.
Newell Palmer has five actively managed portfolios, all of which are available on multiple provider platforms. All matters of fund selection and asset allocation are determined by our Investment Committee and we have a dedicated team, who in conjunction with our Investment Committee, manage these five portfolios. They deal with research, monitoring fund performance, fund switches, auditing and reporting.
Newell Palmer also offer passive solutions, again these are available on multiple provider platforms. The eventual choice for an individual client is, of course, based completely on what is most appropriate for that client’s individual circumstances, goals and risk levels.
SW: How do you co-ordinate your strategic planning? How do you innovate and continue to build best practice?
KH: Just as we talked about our approach to technology, in this area we are also keen to innovate when it comes to our best practices and processes. We have an Operations Team that continually looks to update all areas of the business. We also use a panel of external consultants to assess and recommend areas where we could add improvement or make needed change.
SW: As a business, what is your biggest business challenge at the moment?
KH: The recent introduction of new regulations, such as MiFID II and GDPR is certainly going to be a big area of focus for many IFAs, this includes Newell Palmer.
SW: Let’s look ahead to the next 5 years. What are your plans to grow the business going forward? Are you planning to make more acquisitions?
KH: We have a three year business plan, which runs through until 2020. Our main priority is to continue ‘providing the best possible advice and services to our clients’ – this is our primary focus.
At the same time, our business and operational objectives are to acquire further like-minded IFAs, in a controlled manner and at a sustainable pace. The goal is to increase our turnover to £13 million and increase our business profitability to 25% EBITDA
However, as we discussed earlier, we are due to achieve a £13 million turnover this financial year, so I’m pleased to say that we are ahead of our business plan projections. Long may that last!
About Kevin Homfray
In May 1993 Kevin joined Barhale Construction on an Apprenticeship before progressing within the firm. In 2002 he moved to Newell Palmer to head up the Accounts team. As Finance Director for the group, Kevin oversees the accounting function with specialities covering networking, funding and acquisitions. He is married with a 10 year old daughter. Kevin enjoys walking with his dog, loves holidays, kayaking and reading. He’s a selfconfessed Star Wars nerd and proud!
