A large City based IFA practice approached Periscope in January 2021. The firm built its business largely by acquisition and over the 25 years accumulated over £700M of AUM across thousands of clients. A complete overhaul of the business in 2021 and 2022 was undertaken which identified that their 30 advisers were generating over 75% of the income from their top 30% of clients.

It made no business sense at all to continue like this and the firm had already approached one of the national firms with a view to buying their smaller clients but that contract did not appeal to them.

The team at Periscope worked closely with the Directors and advisers over the next 9 months to help them identify which clients were “smaller”. A challenge in itself given that a small client for a senior adviser might actually be a larger client for a newly qualified adviser.

Nonetheless, after 9 months the Firm had identified the smaller, less profitable clients of the 30 advisers and the AUM amounted to just over £200M.

Periscope was tasked with helping the Firm approach each of the smaller clients to discuss their existing servicing and fee arrangements and to then provide 2 alternatives – to pay a higher ongoing AMC with the Firm, or to move to another IFA at the same cost or lower with the added benefit of a far superior on-going service proposition.

At the time of writing we have approached half of the smaller clients (£100M of AUM) and over 75% have now moved to a new company which has generated £3,000,000 in fees for the City based IFA.

“Before I spoke to the team at Periscope I was dealing with one of the national IFA sales firms who were pushing me down the traditional multiple of income route. I am delighted with how the guys approached my business, explaining that there are other options available which suit both me and my clients.”

Mr Jones of North Wales approached us in summer 2022. Having built a successful practice over 3 decades, this gentleman had approximately 300 clients with £36M of AUM. His clients were largely split between what he called “smaller clients” and “top clients”, and fees charged were 0.5% and 0.75% per annum respectively.

The “smaller clients” of which there were 250 with AUM of £26M tended to hold smaller portfolios of up to £200,000 and servicing was essentially an annual review which was now conducted remotely.

The “top clients” accounted for the remaining 50 clients with £10M of AUM. These clients were more technical in nature and servicing was completed biannually on a face-to-face basis.

Maximising sale revenue for Mr Jones was key, whilst finding a suitable home for the two different client groups.

Under the traditional “multiple of income” sale at 3.5 times, the revenue would be £717,000. However, this would be payable £358,750 up front with balancing payments of £179,375 payable after 12 and 24 months.

At Persicope we helped Mr Jones identify the two client groups and the approached each one in separately – The smaller clients were sold to one company, and we negotiated a deal based on AUM which paid 4%. Of the £26M just over £20M was then moved to this company within 3 months which netted Mr Jones £800,000.

The remaining £6M of AUM and the £10M of AUM from his top clients were then sold to one of our larger IFAs who are focussing on higher net worth clients. This was completed on 3.5 times income multiple at £367,500. £183,750 was payable initially with the remainder payable in 2 instalments after years 1 and 2.

Mr Jones received £1,167,500, over £450,000 more than under the traditional sale route with almost £1,000,000 payable within 3 months.

“The problem is I’m not ready to retire and so I don’t want to sell my client book yet and I find myself working 6 days a week, sometimes up to 8pm at night servicing my existing clients”.

53-year-old Mr Smith of Oxfordshire, a successful IFA with over £75M of AUM across 350 client families was working all hours in an attempt to service a growing number of clients. When we discussed matters within in March last year he could see no way out and whilst the business was growing, his health and home life were suffering.

As an IFA who traditionally serviced his clients on a “face to face” basis regardless of the size of the client portfolio, we suggested that the current approach was untenable going forward and suggested that there is an alternative.

By grading his clients based on portfolio size, we identified with Mr Smith that of the 350 clients approximately 150 clients had portfolios valued at under £200,000 and these generated just £140,000 per annum in on-going annual fees (which were 0.5%) but Mr Smith did not think that he could complete a partial sale of this aspect of his business. Over 1/3 of his client book, representing £28M of AUM, was taking up over one third of the IFAs time in return for a contribution of just 25% of ongoing fees.

Periscope introduced him to a firm offering 8 times his income multiple and Mr Smith sold 150 clients and received over £1,100,000 into his firm. His business was more profitable and he could concentrate on growing the business with the correct type of profitable clients going forward. More importantly for Mr Smith his time was now manageable and his family life and health were now back on track.

Periscope structured the deal so that Mr Smith was paid out in full within 6 months.