At both work and play, it’s fair to say that Roger Brosch, CEO of Foster Denovo, is a very busy man. While not training for endurance events, cycling or satisfying his passion for rugby, he has been steering Foster Denovo through a period of rapid expansion and restructuring, with 10 internal practice buyouts for 18 advisers and three significant acquisitions since securing £100m of funding from Crestline Investors in February 2022.
The most recent of these is the purchase of Punter Southall Aspire’s employee benefits business, which will be brought together with and ultimately under the brand of Foster Denovo’s Secondsight employee benefits division.
This brings a presence in Edinburgh, Yorkshire and the South West, and creates an employee benefits business with 1,500 corporate relationships, largely in the mid-SME 200 to 1,000 employee space.
That is rapid growth for a business that Brosch founded back in 2005 following his departure from Millfield.
“We did £3m in our first year and we have got £30m currently and should be at £40m next year. My philosophy in the business world is that if we look after our staff brilliantly they will look after clients superbly and the profit and loss will look after itself,” he says.
Brosch and his backers see a key opportunity in the space underneath the big global employee benefit consultancies, amongst firms that are still very much committed to attracting and retaining
the best talent. And he says the Punter Southall Aspire deal need by no means be the last acquisition.
Brosch confirms that no job losses are expected at Punter Southall Aspire and adds: “There are a couple of new roles coming along too.”
So why the interest in getting into the workplace benefits sector?
“We see it as a really exciting space and one that will grow in importance. People will become less dependent on the state and more dependent on the employer. We see the employer becoming an increasingly significant player, and we predict an increased focus on financial wellbeing,”
says Brosch.
So how will the two benefits businesses work together and what synergies does he see in bringing them into one?
“Both SecondSight and Punter Southall both good group risk, health and protection teams, and this is a core part going forward. The two businesses provide very similar services, but Punter Southall has an advanced health and protection proposition and we can benefit from that. Meanwhile our [SecondSight’s] financial wellness proposition is advanced and we can offer something more there,” he says.
And what will happen to the Punter Southall Aspire brand?
“It will gradually become SecondSight – the intention is that this brand will grow to be a major player in the corporate advisory sector. We won out partly because SecondSight is a similar brand and we wanted to take the people across. We are Investors In People Gold, and for a business of our size, that is a challenge. It is an important part of the way they work as well,” he says.
Brosch sees Foster Denovo as an integrated financial services group. “We run a high quality financial planning business, targeting upper mass affluent and above. That is complementary to the workplace, where we deliver seminars and workshops, that will filter through to advised.
“And we also have investment solutions for the corporate and private wealth sectors. We offer individual financial planning advice, corporate advice, investment advice and we also have our digital pillar. We want people to be able to self service or take guidance from a digital service,” he says.
Brosch also has plans to launch a master trust to accommodate all the workplace pension schemes it runs.
“We are looking to develop our own master trust and take control of our own DC assets, and run the money in the same way that we do in the private wealth market. Strategically it is in the development phase. When you look at the combined assets we will have influence over, it seems a natural step to bring a more private wealth-style approach,” he says.
Given the drive for scale and the significant regulatory burdens being placed on master trusts in a bid to force consolidation, will Foster Denovo have enough business to make the maths stack up.
“You need to be nudging £2bn to be at the level where you can make it work. We aren’t there just yet but will be soon,” says Brosch.
“We do need to move away from the traditional DC. The product providers haven’t moved very far at all. They are mainly relying on brand. The market seems to have been quiet for a few years. Government intervention could be a boost to that, depending on what they are looking to drive, however,” he adds.
And how will the digital pillar of the SecondSight business evolve? Are we looking at a robo-advice proposition?
“Unfortunately a lot of digital systems rely on good data in, which is not necessarily the case in reality. We are looking more at filling what is seen as the advice gap, in a way that where people can’t afford advice they can get a recommendation and the ability to transact, and an advice stamp, but you can do it digitally at a lower cost. That is in development at present, with a supplier that is live elsewhere. We are quite excited about this. To use a financial adviser post consumer duty, we are talking a minimum of £500 – for where you need some basic advice, the equivalent to what a robo advice solution was looking to do a few years ago,” he says.
And has Brosch still got a war chest to continue his acquisition spree?
“Yes, we still have money to spend. We think it is a good time to be active. The market is a bit more sensible than a year ago. Some acquirers have funding issues and others have bought a lot. We are hoping to do two or three more this year. But I would stress we are not a consolidator – we are a facilitator.
“Consolidators do lots of deals and put everything into a central hub. We look to retain the individual staff members and clients by offering a very similar service, rather than imposing our service on them. It is a more flexible approach that adapts to the business we are approaching. That means fewer but better deals,” he says.
So what does Brosch make of the flood of private equity money that seems to be targeting the advisory, consultancy and benefits sector?
“There is a lot of private money that has come in, and quite a lot to happen yet. We have a lot of advisers who are getting towards a stage where they have pressures around tech and admin and compliance, or thinking about retirement and their exit. We expect to see this continue for the next few years, and then after that the green shoots of new propositions coming through,” he says.
“Since the removal of commission it has taken a long time for the SME market to re-group and find itself. We think we can take a lead in providing quality advice.”
Brosch’s background is financial services through and through but he thinks the industry is in much better shape today than in the past.
“The market has grown for the better with the reduction of the influence of the provider and the asset manager and it is more about the client rather than the product push.”
All about Roger Brosch
▪ Joined the financial services sector in the late 80s working in direct sales
▪ Worked with Paul Tebbutt at Millfield as sales director
▪ Founded Foster Denovo in 2005, bringing numerous Millfield staff
▪ Born in Sutton Coldfield and grew up on a farm in Whittington near Lichfield
▪ Big rugby fan – Leicester tigers
▪ Enjoys endurance events and cycling