Highlights
- As a relationship-driven sector, wealth management is an attractive and growing sector, driving consolidation of independent firms – but success requires a thoughtful approach
- Addressing increasing client demands while investing in regulatory and digital infrastructure can be very difficult for small independent wealth managers
- Absolute’s approach to building a group of independent companies allows member firms to retain personal relationships while benefitting from centralised infrastructure
Wealth management is attracting strong investor interest thanks to recurring revenues, structural growth and consolidation opportunities – but scaling successfully requires careful integration and adviser retention.
Wealth managers are in an enviable position, operating in a market enjoying structural tailwinds, recurring revenues and a highly cash-generative business model, which makes companies in the sector well positioned for long-term growth. Additionally, clients’ need for advice does not fluctuate with economic cycles, creating resilience which is as enviable as it is rare today. And the fragmented nature of the industry – there are around 5,000 independent adviser firms in the UK – presents consolidation opportunities – well suited to experienced private equity partners. However, successful consolidation depends on preserving adviser relationships, maintaining independence and integrating firms carefully.
“This is truly a relationship-driven market where trust, independence and continuity matter deeply to clients,” stresses Andrea Bertolini, Partner and Head of Financial Services at Inflexion. “While scale can support broader service offerings, stronger governance and improved technology, it can also risk diluting the personal relationships that underpin high-quality advice.”
The last decade has seen a wave of consolidation, with both domestic and international consolidators entering the UK market with sizeable acquisitions seeking to build global platforms. While this headline activity underlines the exciting opportunity for the sector, it doesn’t reveal the practical challenges of integration. “Integrating advice, investment and platform services can unintentionally reduce adviser autonomy, while over-standardisation risks weakening the long-term client relationships on which many firms are built,” Andrea points out.
At the same time, customer expectations are evolving. Clients increasingly want advice that extends beyond investments to encompass financial planning, tax considerations and intergenerational wealth transfer. For smaller independent firms, rising to this challenge while investing in regulatory infrastructure, digital capability and talent can be difficult without additional scale. AI can play a role here, but it should augment rather than replace the trusted relationships that sit at the heart of the wealth management client proposition.
How private equity firms scale wealth managers
A number have achieved this scale, with Succession serving as one of the UK’s most ambitious consolidation stories. Between 2014 and 2022 Inflexion worked with the business to complete around 60 acquisitions, developing an operating model that allowed newly joined firms to retain their client-first culture while benefiting from centralised infrastructure, enhanced compliance and broader investment capability. By the time of its sale to FTSE 100 company Aviva, Succession had become one of the UK’s largest independent wealth managers – demonstrating that scale and independence can reinforce one another when managed well.
Inflexion’s history of investing in wealth management and related advisory businesses has created a proprietary and proven playbook it can execute. It understands what works – and what does not – in the sector. “Scale can create real value, but only when it is built carefully and with an operating model that preserves adviser independence,” Andrea points out.
A different approach to IFA consolidation
This experience is driving Inflexion’s latest investment in the sector: the backing of Absolute Financial Group, a UK independent financial adviser (IFA) consolidator setting out to acquire and support smaller advisory firms. It launched with £100 million of committed funding at the end of last year.
Rather than pursuing large, highly priced entry platforms, Absolute is focused on becoming one of the UK’s leading IFA firms by bringing together a high-quality advisory business under a unified and well-resourced structure that supports advisers. They are doing this by acquiring smaller advisory firms, typically with around £80 million of assets under advice and a small number of advisers, where integration risk is lower. These are the firms that often lack the scale to invest in systems, governance and succession planning, but still have strong client relationships and local reputations.
The journey is combining selective acquisitions with continued organic growth, supported by a hybrid advice model that blends face-to-face engagement with scalable digital tools. The intention is to build a business of sufficient size to appeal to both strategic and financial buyers over time, without losing the characteristics that underpin trusted advice.
The origins of Absolute reflect its current ambitions. Rather than entering a competitive auction, Inflexion sought a smaller platform outside a formal process, led by an experienced industry figure. That search led them to Paul Hogarth, Founder and Chair of Absolute, who has built and exited three businesses in the sector. The opportunity was originated through Paul’s network on a bilateral basis, with Inflexion the only private equity firm involved in discussions owing to Paul’s previous successful work with the firm.
Their combined sector experience meant they quickly agreed it was key to get the right foundations in place. Paul, supported by Inflexion’s Talent team brought in a CEO, a CFO, and a Head of M&A from day one.
The opportunity ahead is as exciting as it is sizeable: many of the nearly 5,000 independent financial adviser firms in the UK are sub-scale and facing increasing regulatory and operational complexity. The popularity of the sector means they’ll be in high demand – and so Absolute has to differentiate itself positively. “I think every other consolidator will be saying, ‘we’re going to get rid of some of the staff, we’re going to change the name straight away, we want you to use this platform’. We don’t want to do it that way. We want to be different,” Paul stresses
We want firms to grow not by focusing on compliance, but by doing the bit they like – being in front of people.
This approach should propel Absolute to complete around 20 acquisitions per year, building a repeatable M&A engine and integrating firms in a consistent and measured way. Momentum is already strong:15 businesses have been acquired since January.
The emphasis is and will remain on enabling advisers to focus on clients. Says Paul: “We don’t want to change the way that you do business. We want you to concentrate on building that business… you’ve got more time to do what you really like, which is actually advise – being in front of people.”
Paul points to the UK’s underpenetration vis-à-vis the US as a big opportunity. “There is a real shortage of advice in the UK; the number of advisers per head of population in the US is twice as much as here. There’s so much room for growth in the UK.”
Wealth management is one of Inflexion’s core financial services subsectors and one the team has followed for more than 15 years. While competition for assets has intensified, the opportunity to back a platform with a clear strategy and disciplined starting point has remained compelling. If you’re thinking about growing your business, please get in touch.
