After a monumentally rubbish eight months, the occasional shaft of sunlight pierces the clouds – a U-turn on whether it’s OK to let kids go hungry, the potential for a vaccine that works, and the really big one…genuine, laugh-out-loud comedy from the American politico-judicial process. If it wasn’t for the import taxes I’d be buying one of these. Maybe Brexit will sort that out. Actually, probably not now.

Our subject of the week is consolidation, or rather consolidators. In fairly short order we’ve had…

No question, then, that consolidators are once again hot right now; perhaps as hot as they’ve ever been, and have the Bobby Axelrods of the world very interested.

If we’re honest, the consolidator market doesn’t really have an amazing reputation for service, being a nice place to ply your trade or putting customer outcomes at the forefront of the game. But that doesn’t matter much; what Axe really likes, I suspect, is the exposure to retail investment in general and pensions in particular, especially as the UK baby boomers start to seek retirement advice en masse. He also likes the revenue model, which involves the firm setting the price also being the one closest to the client and least likely to get fired…see Updates passim for more on that.

What he doesn’t like is buying small firms, which means he needs to get bigger, more investible fish; and if he can’t find them then he needs to make his own fish. I think I might have stretched that fish analogy a bit too far. You can stretch fish, but only to a point.

Anyway, all this works great if you have a constant stream of firms who are happy to take the shilling and join the merry band. If you don’t, then the model comes unstuck pretty quickly.

With that in mind, we thought it might be interesting as part of our State of the Adviser Nation survey this year to ask firms what they think about all this. 568 firms took part, and we asked all the business owners who responded if they planned to still own their business in five years’ time. 268 answered, and 72% of them said yes. 80% then went on to say that they thought their business would be larger in five years’ time, but purely as a result of organic growth.

There’s a lot of money sliding around this sector just now; a lot of bets being placed. I do wonder, though, if the incredible supply of firms that all these consolidators collectively need to get where they’re going really will be there. I guess that will be down to you.


And your music choice this week lifts us up and out of whatever we’re facing, or will do if we let it. You just can’t do much better than In Remote Part by Idlewild, which you might have heard if you do Tim Burgess’s album listening parties on Twitter last week. The spoken word part is by Edwin Morgan, Scotland’s other national poet.

See you next week