Mattioli Woods is undoubtedly one of the best known firms in the City. Founded in 1991 by Ian Mattioli and Bob Woods, the wealth manager floated on the LSE in 2005. These days, the group has around 600 employees that together manage around £12bn in assets for 10,000 clients.
In an exclusive interview, City A.M. sits down with Ian Mattioli MBE, the CEO of Mattioli Woods, to talk about continued acquisitions in the wealth management and advice sector, how Mattioli Woods maintains the culture of their business throughout and post-pandemic and why he reduced his salary to zero as the Covid-19 pandemic hit.
Your firm has historically been known for being acquisitive and you have recently completed the acquisitions of Maven and Ludlow Wealth Management. Do you feel there is a feeding frenzy in wealth management M&A that is pushing up prices?
We set up Mattioli Woods 30 years ago in my tastefully converted garage and the world has really changed since then. Regulation has had a huge impact on advice and wealth management firms and for many they get to the stage where they can’t grow any further without investment. So, they have two choices, look for outside funding or join like-minded businesses.
Many of the firms that have joined us over the years are owner-managed or have a small management team. They care about their business and they want their clients and their staff, both of whom are often their friends, to be well looked after and in an environment where they can grow and thrive. This is where Mattioli Woods comes in as we can offer them this peace of mind. Combining like-minded businesses together is about good values and culture, taking the best of what both teams have and combining all of those skills together.
Sure, but let’s talk financials, you spent substantial amounts to grow and expand?
Yes, it is worth saying that we also pay a fair price, as to buy anything of quality costs money. But we aren’t always the highest bidder. We are chosen because we are often the management’s preferred choice; they can see the cultural fit that we see. By placing priority on the cultural fit and by bringing like-minded businesses together, we can all benefit, and we can all take clients, staff, suppliers and stakeholders on a better journey. What the combined group can achieve excites me.
You asked about a ‘feeding frenzy’. I think at the moment much of that is driven by private equity-backed consolidators.
They are hoovering up any IFA business they can get their hands on. But these businesses that are being consolidated are not necessarily a good fit for us; they don’t have the right clients or the underlying cultural fit.
You have described these latest acquisitions as ‘significant milestones’. Why is that?
Six years ago, when we were a fifth of our current size, we set a goal to hit £100m in revenue and £15bn in assets and these acquisitions will help us reach this. The Maven acquisition is really nice as we have known them since we listed on AIM in 2005, as they invested in our IPO via one of their Venture Capital Trusts. The next goal we’ve put out to the market is to hit £300m in revenue and £30bn in assets, and we hope that these acquisitions that broaden our product offering and distribution will help us to reach this.
You’ve mentioned culture a few times. What does this mean to you?
We have always sought to balance the need to grow the business for shareholders with a strong ethical focus and doing the best for clients. We have been clear with our investors that putting clients at the heart of everything we do and ensuring good outcomes for them, means growth for the business and profit for shareholders.
Therefore, at the heart of our culture are our clients. We are constantly striving to lower TERs (the total ongoing charges paid by clients), which in my opinion are too high across the industry. I expect it’s highly likely that the industry will therefore suffer one of two scenarios – either government intervention or a good disruptor might come in. So, we’re working towards making sure we’re cost effective now and in the next 5, 10, 30 years down the road.
It is also about the diversity of the business. People discuss and use diversity in our industry just to tick a box, but we see diversity as a great opportunity.
We are diverse in how we work with clients and we are diverse in how we hire and retain people. I have always believed that if you give people an opportunity to thrive, they will. We have people from all walks of life and all types of backgrounds. That is what makes us a success and will continue long after Bob and I are gone.
Going back to last year, why did your senior management choose to take pay cuts at the start of the pandemic and you personally to waive your salary entirely?
It was driven entirely by the need to secure the longevity of the business in the face of such uncertainty. When we sat down to discuss it, just before our financial year end in March 2020, our priority was to ensure all of our people were safe and that we could guarantee security of employment. By taking the salary cuts we did, we knew we had enough resources not to have to furlough anyone. We think that was a positive thing to be able to say to everyone they all had security and could really focus on ensuring our clients were OK, because we were OK.
Our mantra has always been that we look after other people’s money, so there is a sort of expectation that we should be able to look after our own.
It’s incredible really how we managed to get 600 people working from home in a matter of days without having any adverse impact on the client proposition. In fact, we were arguably more efficient with clients and that will be part of our future thinking.
Do you think the pandemic has changed your working practices permanently?
I said at the very beginning of the pandemic that I hoped at the end we would all be a bit more caring and I am seeing this in so many places. One of the most interesting outcomes of the whole pandemic, especially in businesses like ours, where our advisers will have spent half their life going up and down motorways of the UK to see clients, was the space to ask, ‘what on earth have I been doing spending so much time in a car?’ That was a revelation.
You can’t beat face-to-face meetings. We’re a people business, so I wouldn’t want to do away with them completely, but what the pandemic has shown us is that you can have those keeping-in-touch meetings screen to screen, in between the face-to-face meetings. This enables us to enhance our client interaction.
Keeping in touch and reassuring clients that they are still meeting their long-term financial goals is critical for us and we’re excited about a world in which we can meet people again, but meet them efficiently.