Adviser profile: Ruth Sturkey and Barry Horner of Paradigm Norton

Ruth Sturkey and Barry Horner have joined forces to create a financial planning powerhouse at Paradigm Norton that has talented graduates queueing around the corner

Building a large-scale, independent advice business that provides true financial planning has often been assigned to the too difficult pile, by small and large firms alike.

But with over £1 billion under advice, Paradigm Norton is somewhere close to proving a purist planning proposition need not buckle under the pressures of growth. Joining forces with a like-minded business, and carefully managing its assimilation, certainly helps. It just takes an open mind, cool heads and a lot of coffee.

In 2018 Barry Horner’s Bristol-based powerhouse Paradigm Norton merged with the highly regarded London boutique and fellow New Model Adviser® cover star alumnus Red House Consulting, run by fellow financial planning luminary Ruth Sturkey.

Nearly 15 months on from closing the landmark deal, and just over a decade since they first met, when Horner spoke at an event as president of the Institute of Financial Planning, the pair believe they have ‘built something quite special’.

This extends well beyond the numbers. The new-look Paradigm Norton has lofty aspirations to enhance its impact on clients, employees, the profession and society at large.

Building a large-scale, independent advice business that provides true financial planning has often been assigned to the too difficult pile, by small and large firms alike.

But with over £1 billion under advice, Paradigm Norton is somewhere close to proving a purist planning proposition need not buckle under the pressures of growth. Joining forces with a like-minded business, and carefully managing its assimilation, certainly helps. It just takes an open mind, cool heads and a lot of coffee.

In 2018 Barry Horner’s Bristol-based powerhouse Paradigm Norton merged with the highly regarded London boutique and fellow New Model Adviser® cover star alumnus Red House Consulting, run by fellow financial planning luminary Ruth Sturkey.

Nearly 15 months on from closing the landmark deal, and just over a decade since they first met, when Horner spoke at an event as president of the Institute of Financial Planning, the pair believe they have ‘built something quite special’.

This extends well beyond the numbers. The new-look Paradigm Norton has lofty aspirations to enhance its impact on clients, employees, the profession and society at large.

Fusion friction

Speaking to New Model Adviser® at the rebranded Paradigm Norton office in Farringdon, Horner attributes the success of the merger to similarities between the two firms on big themes, such as culture, values and investment philosophy.

‘I think that’s why some of the mergers don’t go so well because you get a clash of cultures,’ says Horner. ‘We describe our investment philosophy as low-cost market return.

‘But if you were to bolt together two businesses that had a fundamentally different philosophy, or one that was a financial planning business and one that describes itself a wealth management business, that’s where you’ve got a problem.’

That is not to say the process was simple, particularly once the fine detail of the legal process got under way. Sturkey says the merger process did hit a point where ‘it becomes legal process-driven,’ with discussions revolving around wordings and interpretations, ‘where each party has a different view’.

Some meetings ‘were a little bit more high tension than others,’ she says. ‘But Barry and I would take a step away, go and have a cup of coffee, and we could then quite easily navigate our way through it.’

Most difficult for Sturkey as the leader of a small and close-knit business was breaking the news to the team.

‘What was staggering for me and very humbling was they were very surprised and actually quite upset,’ she says. ‘Of course it worries people, so I had one-to-one meetings with people to make sure they were feeling comfortable.

‘We had our annual team day two weeks later, and Barry and [operations director] Matt [Fowler] came to the meeting to answer questions. You could see people’s shoulders start to relax as the conversation continued.

‘As a business owner, it was a very emotional time because we had this really close-knit team, and I was causing them discomfort. I did actually find it really difficult at that time.’

Horner adds: ‘You then mix in the emotion you have when you’re selling the business. You’re signing for the future but there is a feeling of bereavement and loss of what’s gone.

‘But we both feel very proud of Red House and Paradigm Norton, and feel we’ve built something quite special.’

Seamless integration

For both Sturkey and Horner, the word ‘merger’ has a deeper meaning. Paradigm Norton was a much larger firm that acquired a much smaller firm, but the pair say both parties felt they could learn from one another.

‘Barry and his board have been very astute in recognising they were buying another very good firm that was smaller but also successful,’ explains Sturkey, ‘and therefore not seeking to throw the baby out with the bathwater.

‘So it was about asking: “what do you guys in London do?” Whether that was from a client perspective or a personal or team development perspective, they were asking themselves what they could learn from the Red House.’

The benefit of running a smaller business, she adds, is being able to establish consistent processes with ease of oversight from the top, which becomes more difficult as the business expands. Sturkey believes Paradigm Norton has offered that scale, while adopting a host of Red House ideas and compliance processes.

‘Paradigm Norton saw that and enabled that to continue,’ she says. ‘That has helped the team feel like they’ve retained some autonomy, but with the support of the greater breadth and depth of the larger organisation and all the opportunities that brings.’

A recent example is the firm’s client coaching and mentoring processes. At a recent senior leadership team meeting, Paradigm Norton agreed to adopt the old Red House methodology of quarterly coaching and mentoring meetings, replacing annual reviews.

Horner says: ‘That’s just one of a number of examples where we have said: “what you’re doing is much better than what we’re doing”. If you continually do that, you end up raising the bar constantly which is one of our core values.’

Young blood

Paradigm Norton has been working for some time on attracting and retaining young talent to shore up the future of the business. Horner says that, while financial planning has some way to go before being recognised as a profession by the wider public, and universities in particular, ‘the tide has started turning’.

‘We’ve been recruiting for a graduate in Bristol for this year and we had 174 applications for one position. It’s by far the largest number of applicants we’ve ever had,’ he reveals.

After a rigorous series of interviews and assessment days, there were 10 outstanding candidates for one position on the graduate scheme, Horner says.

But as well as searching for the financial planners of the future, the firm is in the process of developing a ‘leadership academy’, a separate pathway, in partnership with a university, to equip those with people management instincts within the business to lead it into the future. This forms an important prong of Paradigm Norton’s succession plan.

‘We have some outstanding people who are not only great with their clients, but are really good with managing a team,’ says Horner.

‘Ultimately, they will join the senior leadership team and the board. How do we identify such individuals? How do you make sure they’re equipped with the skills they need?

‘I think we’ve been good with the soft skills training and technical training, but I don’t think we’ve focused enough on leadership. That’s probably true of most financial planning firms.’

Success stories

Good trainees require development and Paradigm must now make sure it is ‘feeding the hungry graduate monster’.

Horner explains: ‘What goes with recruiting high-calibre graduates is that they have significant expectations for their involvement in the future. When I look back at my career, I was very happy to just methodically progress at a reasonable pace in accountancy. These guys think in a completely different way.

‘We want to continue to build the business, and people want to know they’re in an organisation that is growing and thriving, but that doesn’t mean doing crazy things and overextending ourselves.’

To this end, the firm has recruited a marketing manager to help attract more clients, which in turn satisfies the hunger of its ambitious younger recruits to take on client-facing roles. Its marketing strategy, Sturkey explains, focuses on capturing and publicising client success stories.

Some clients want their adviser simply to be ‘stewards of their wealth,’ says Sturkey, ‘to do the right things at the right time, keep a steady hand on the tiller,’ but others do give planners more engaging stories to tell.

‘We all have a client who gave up work and went to live in Portugal at 42, or has given significant sums to charity. It’s about getting that combination right,’ she says.

‘I don’t think you can exclude those of us who just want to live a good life. It’s very much in the eye of the beholder what “good” looks like and it isn’t for us to make a judgment on that.’

The one client the firm does not have, says Sturkey, is the one ‘that just want to build massive wealth. What’s the point of that? We enjoy working with people who get what life’s about.’

The firm is also in the process of applying for B Corporation status by June this year. The certification is awarded to businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.

Horner says: ‘Our legal documents state we are a for-profit business, but I’ve always maintained that if you do the right thing, the profit follows. We’ve never been a profit-motivated business. When we meet as a board, we want good discipline around finance, but that’s not what gets me out of bed in the morning - it’s the purpose of the business that really drives things.

‘Our focus isn’t first on generating profits, it’s also around having societal and environmental impact. That is something we have always tried to do, but we want to do it in a more intentional way, and we don’t want to just pay lip service to it.

‘We want it to impact the business, and I think it will have a much bigger impact than we know at the moment.’

The fee bit...

Paradigm Norton offers clients a choice of three payment methods: an ad valorem charge of 1% of assets under management, a time-based cost or a fixed fee.

The percentage option tapers down to 0.75% for clients investing over £2.5 million, and becomes subject to negotiation over £5 million. Wealthier clients with highly complex planning and investment needs will typically pay between £30,000 and £100,000.

Time-based clients receive an upfront quote based on the nature of the work and how long it will take to complete. Horner likens this to the method used by law or accountancy firms. Should the work be delivered under budget, or unforeseen circumstances arise that add to the complexity, charges can be changed.

Clients who are charged a fixed fee for the initial financial plan typically pay between £5,000 and £15,000 depending on the complexity of their circumstances and the value added by the plan.

Horner estimates around 60% of clients pay the ad valorem charge, with the remaining 40% split between fixed fee and time cost.

The investment bit...

To achieve the low-cost market return it believes clients want, Paradigm Norton does its investment work primarily in-house. It allocates 90% of its assets under advice to passive funds, mostly exchange-traded funds provided by Vanguard and Dimensional Fund Advisors (DFA).

The firm’s most balanced portfolio, the PN 60/40, carries a 51% equity rating, with 38% in fixed interest, 2% cash and 9% in the iShares Global Property Tracker. The portfolio as a whole has accrued a five-year cumulative return of 21.2%.

The fixed interest allocation is almost entirely made up of the Dimensional Global Short Dated Bond fund, while almost half of its equity weighting is allocated to the Vanguard FTSE Developed World (ex UK) Index.

In its more aggressive portfolio, 18% is held in the same Dimensional fund, while allocation to the same Vanguard tracker increases to 32.2%. The cautious option increases its holding in the DFA Global Short Dated Bond fund to 78%, while 8.1% is allocated to the same Vanguard fund.

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