Stephen Ford: ‘We will absolutely be acquiring in the next couple of years’

WH Ireland head of wealth management on how ‘brutal’ restructure helped company finally turn a profit

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On joining WH Ireland in March 2019, Stephen Ford was forced to make some quick but important decisions. The wealth manager and corporate broker firm had been haemorrhaging cash and at the end of that month, posted a £12m loss for the year. Swift action was necessary.

Almost two years later, the firm is on a better footing. A year after Ford joined as head of wealth management, losses had shrunk to £3m and in October last year, it posted its first half-year profit for five years. For the six months to the end of September, WH Ireland made £500,000 profit, compared with a £910,000 loss for the same period in 2019.

At the time of writing, the firm’s share price is hovering around £45, some 22% higher than it had been on 15 March 2019.

‘Fairly brutal’ restructure

Ford recollects the baptism of fire he experienced in his first month on the job.

“In the first four weeks, I had to make some pretty big decisions because we wanted to tidy up the balance sheet and make some key decisions around what was and wasn’t going to be in the portfolio,” he says. “That led to decisions around shutting offices very early on, which is not a great way to arrive at an organisation: closing offices in the first four weeks.”

WH Ireland did what Ford terms a “fairly brutal” restructure. In 2019, the firm consolidated middle-office functions at its Manchester office and, earlier last year, closed its Milton Keynes office. Group headcount in June 2020 was 148, down from 159 a year before.

As well as closing non-performing offices, WH Ireland’s turnaround can be largely attributed to the consolidation of duplicate wealth management platforms and corporate broking trading systems.

Ford admits that at the beginning of 2020 he was feeling buoyed by the way things were starting to pan out – but then Covid hit. In mid-March, he found himself booted off a ski resort and worrying over the future of the business once more.

“At that point, if you’d have said to me, ‘Don’t worry, Fordy, within 12 months, you’ll have declared your first profit and done an acquisition’, I think I’d have snapped your arm off for that.

“I think we went into that time thinking it could be a challenge. We weren’t a financially strong organisation.”

But he describes the business’s response to the crisis as “phenomenal”, crediting the “sheer momentum” of the turnaround in both the capital markets and wealth management divisions for helping towards the first-half profit.

Sales and acquisitions 

In June last year, WH Ireland sold its Isle of Man subsidiary to Ravenscroft, the offshore wealth business chaired by Hargreaves Lansdown co-founder Stephen Lansdown. The subsidiary was opened in 2014 and provided investment management services to a “diverse international client base” and contributed roughly £1.2m of annual revenue. Assets under management stood at £353m as of 25 June 2020, WH Ireland said at the time.

Ford says it was a straightforward but strategically important decision. “We were a subscale business and to try and be subscale in two regulated jurisdictions was a challenge,” he says. “We just didn’t have the resources to invest both in the UK and the Isle of Man and therefore, it was in the interests of the Isle of Man business just as much as ours to find them a new home.”

But the firm has also been acquiring. In November 2020, it bought Henley-based wealth manager Harpsden Wealth Management by entering into a conditional agreement to acquire the entire issued share capital of Harpsden. The deal adds £390m worth of assets, lifting WH Ireland’s AUM by 14% to £2bn with £1bn managed on a discretionary basis.

“I met the guys from Harpsden Wealth in 2019, about six months after I joined, and painted the picture of what we wanted to build and we got on well,” Ford recalls.

To fund the purchase, WH Ireland sought to raise £5.3m by issuing 13.3 million ordinary shares, which longstanding shareholders Polygon Partners and M&G agreed to participate in.

“We did the raise, which was marginally oversubscribed, and we were obviously successful. People who subscribed are showing a profit on WH Ireland shares, which has been a pretty rare occurrence in the past few years.”

The acquisition might never have happened had Covid not struck. WH Ireland had initially been outbid by another firm, but the deal fell through because of the pandemic. In fact, WH Ireland was also the underbidder the second time round but it was the preferred home for Harpsden’s leadership team.

Buying a firm remotely in a global pandemic has been tough, says Ford, who has spent hours on Zoom trying to negotiate things like share price agreements. Now the two firms are working together, Zoom is the go-to platform for town halls, platform negotiations and discussing items such as Transfer of Undertakings (Protection of Employment) regulations.

“It’s been really strange to have bought a business and never seen the building,” he adds. “We have a Henley office, but I’ve never seen it.”

Doing it the ‘Harpsden way’

Ford says WH Ireland’s goal is to become an independent financial planning business with discretionary fund management (DFM), and he wants to have £3bn in discretionary assets within three years.

The firm is targeting what Ford sees as a gap in the market, which on one side sit high-quality independent advice businesses that offer simple model portfolio solutions; and on the other, complicated investment management businesses that offer restricted or simple advice propositions.

“We want to build the best of both worlds: a high-quality advice proposition that is independent, linked to a full service and really capable investment business.”

So, does the acquisition of Harpsden enable WH Ireland to do this? “Harpsden accelerates that strategy,” says Ford. “With Harpsden we got another six financial planners, most of who are chartered, and we intend to become chartered after integration, which will be another point of differentiation.

“Their approach to financial planning was so much better than ours, it was a real opportunity to shake up our financial planning and, if you like, do it the Harpsden way because we can learn from that. That was huge attraction and brings us credibility in the IFA space.”

He says the aggressive cost-cutting measures six months before the acquisition helped pave the way for Harpsden to bed down smoothly so there were no job losses.

“[Cost-cutting] gave us bandwidth to say, ‘we’ve got a solution for financial planning now’.” He says the firm has been running light on research for some time but the addition of Harpsden introduces a “better balance and deeper research”.

As part of the acquisition, Harpsden’s founder and chief investment officer Ian Brady is moving to lead research across the combined entity. Brady, who has more than 25 years’ investment management experience, launched Harpsden in 2008 and before that, was head of funds of funds at Invesco.

“It feels more like a merger because part of the attraction here is getting that talent into our firm so the whole enterprise moves forward,” says Ford.

In April last year, WH Ireland was also in talks with CEO Phillip Wale’s former employer Cantor Fitzgerald Europe about the “possible acquisition, transfer or introduction of certain assets of part of Cantor’s mid-cap and Aim corporate finance business”.

However, talks fell through a month later. Ford says it wasn’t a case of an either/ or situation in relation to buying Cantor Fitzgerald and Harpsden.

“Both or neither could have happened and overall, they’re in different business divisions,” he adds. “Cantor Fitzgerald just didn’t work and we walked away.”

Now, WH Ireland’s DFM assets are just over £1bn and in order to reach the desired £3bn over the next three years, inorganic growth will be essential.

“Organic growth is not going to cut that alone, so we will absolutely be acquiring in the next couple of years to fulfil this strategy of becoming a high-quality advice provider,” says Ford.

To-do list

One of the biggest challenges in the current environment is attracting new clients and so the firm has been “playing around” with digital seminar formats with “quite a bit of success”.

But Ford says the practical elements of selling, when look and feel, and body language are so important, are proving difficult. “On the other hand, for existing business we’re finding clients are really enjoying Zoom,” he adds.

Another obstacle, especially with the country in a third lockdown, is fatigue among the workforce. It’s a dark January afternoon when Ford is speaking, lockdown 3.0 is set to be extended, kids are at home from school and the weather is bad.

“Certainly, we’ve found keeping staff motivated much more of a challenge,” he says. But the recent hire of Karen Barnett as head of HR from Merian Global Investors and a concerted effort to communicate with staff regularly to share the company’s successes are ways of addressing the lockdown slump.

“We feel we need to do more in this area to build a sense of belonging within the firm and to work harder in looking out for our people because this is going to continue for some time.”

Also on WH Ireland’s radar is the launch of a listed Aim EIS service to build on its heritage in the Aim space. Ford notes a lot of the EIS services available are in private companies, making them difficult to exit.

“They are often called ‘lobster pot’ investments: you can get in but you can’t get out. Given the access we have to deal flow and our contacts in this space, offering a listed EIS service as we move into a more hostile tax environment is something we are actively considering.”

Another item on the to-do list is to realign the Harpsden ethical service to become a more focused ESG offering. WH Ireland used to have an ethical service but Ford says he wasn’t proud of it so he kiboshed it.

“I have a very simple rule: if I won’t put my wife’s money in it, then I’m not going to offer it,” he says. “We’re currently working on what we think the market is looking for. And we will need someone credible to run it, so we’ve got one of our people going through the ESG certificate.”

But Ford is in no rush to push out a sub-standard offering, warning that while renewables and sustainable investment are clearly going to be present for a long period, there is a risk of prices escalating when lots of money chases just a few investment ideas.

“That’s great if you’re in early but we could see a very frothy renewables sector if we’re not careful,” he says. “We’re thinking about how we do it. If you make it too focused, you could end up in an asset class that becomes frothy. But if you make it too broad then you’re pleasing nobody.”

This article first appeared in the February 2021 issue of Portfolio Adviser magazine. Read more here.

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