From running a business with revenue of half a billion at RAC, to overseeing Debenhams’ international expansion, Chris Woodhouse brought a wealth of experience in growing businesses to Tilney when he joined as CEO last October.
With boardroom positions at Halfords and Agent Provocateur also adorning his CV, his route to the top has not been a conventional one in wealth management. But Woodhouse insists he is no ‘newbie’ to financial services. RAC derives the bulk of its income from its insurance and financing divisions, and he started out his career in the City, meaning that by returning, he has really ‘come full circle’.
And retail and financial services are not without similarities. Both are people-focused businesses facing significant margin pressure, as well as the challenges and opportunities thrown up by increasing digitisation.
‘I spent a lot of time in retail and consumer and think there is a degree of similarity between them. It’s like any other industry – if you offer first rate customer service with a good product, such as financial planning (it’s a sad fact of life that there aren’t many people doing that), you will get the trust of your clients and they will tell your friends about you,’ he says.
‘The discipline is around how you run businesses and lead teams of people and they are fairly transferable from one industry to the next.’
Getting to grips with Tilney
When he started at Tilney, Woodhouse felt it was important to get on the road and meet the teams staffing the company’s 30 offices around the UK – an exercise he repeated last month.
‘When I first arrived, I would literally spend one day in the head office and the rest of the week holding town hall meetings in the regional offices, getting to know people and for them to know me,’ he says.
‘It’s really worthwhile, as long as you get the confidence of people so that they’re happy to speak up and tell you what they really think, rather than what they might think you want to hear. I think I’ve met everyone in the business and there’s about 1,100 people. It’s important to make sure you are visible.’
He says that the meetings also served to reinforce his confidence in the business and the opportunity it has in what he sees as a very fragmented wealth management market.
Tilney certainly appears to be in rude health. In July, it announced that its revenue rocketed by 68% to a record £226.5 million in 2017, while assets under management (AUM) rose 60% year-on-year to £24.1 billion, following its acquisition of Towry in 2016.
The firm saw gross inflows of £3.2 billion, up from £1.98 billion, another record. Net inflows and pre-tax profits will only be revealed when the company publishes its full-year results later this year, but the indicators point to a business expanding rapidly.
Woodhouse is keen to accelerate this and highlights the importance of the breadth of services that Tilney offers, its national coverage and the scale it is building as key advantages.
The company now has 208 financial planners, 180 investment managers, plus a further 32 digital or telephone-based advisers and a 31-strong central investment team. It offers the full range of wealth services from execution-only and financial planning to centralised investment portfolios and bespoke personal investment management for higher net worth clients.
‘The key strengths and leverage points of the business are about being able to offer a broad range of services and channels for delivery. With us, where it is appropriate, the client can get the benefit of a financial planner and an investment manager, and an integrated wealth management offering. I believe that we have got that working better than everyone else. Could it be better still? Yes, absolutely, and my principal focus is anything we can do in the business to make that operate even better,’ he says.
‘So I think the raw materials in terms of what will fuel future growth are there and we will back that up with the further recruitment of financial advisers coming into the business, which we are very keen on, and secondly, M&A – it is about building scale.’
On the acquisition front, Woodhouse describes himself as agnostic both in terms of whether Tilney buys financial planning or investment management-focused firms and the size of any deal. He points out that in the last two years deal sizes have ranged from Towry, which had AUM of £9 billion and over 900 staff, to Midas Investment Management with £162 million and a headcount of two.
Woodhouse will not be drawn on whether any more acquisitions are imminent, but he describes the industry as far more fragmented than others he has worked in, with a lot more businesses potentially up for sale.
The one certainty is that further deals will happen in the relentless pursuit of the holy grail of scale.
‘Gaining scale helps with pricing and efficiency and we are able to drive fund costs for the benefit of our clients. With scale, the other advantage is that you can afford to have a proper compliance and audit function over the full business,’ he says.
The challenge in managing this growth is ensuring that the focus on delivering a personalised bespoke client proposition is maintained, he stresses. The danger of scale, he says, is when a company’s propositions drift to become more homogenised, but, ‘if you can achieve both of those things, then happy days’.
Into the future
Woodhouse says around 90% of the group’s clients have now been migrated onto a new back office system, which was developed at a cost of around £15 million to consolidate the myriad of legacy systems that Tilney inherited through its acquisitions.
The company’s IT department’s next task could be building the front end for a robo-adviser proposition, an area the firm is eyeing up.
‘To some extent, we already have it in Bestinvest on the execution-only side and also the fact that we’ve got telephone-based services for both financial planning and investment management,’ he says.
‘So we’re offering aspects of what you’d describe as robo advice already. All one needs to do is bring it together on a digital platform. I don’t see robo as a threat, I just see it as another method of service delivery, which we’re probably quite well-placed to offer. It’s certainly something we’re thinking about.’
The ability to service smaller clients, including the next generation of customers, more economically is understandably appealing.
However, this would likely include an element of advice, with Woodhouse saying that all of the research he has seen showed that most people want the ability to speak to someone if they need a bit of help.
He adds: ‘Most people still want advice and feel uncomfortable purely dealing with a digital offering. They want a bit of guidance, whether that’s through web chat or a telephone call to make sure that the decisions they’re making are the right ones. Because of the weight of expertise that we’ve got in the business, I think we’re ideally placed to be offering that.’