Bigger is better’ and ‘scale matters’ have become watchwords across the DC landscape in recent years. But this doesn’t just apply to default funds — for certain clients it can be equally important in the consultancy sector too.
This is fuelling a wave of consolidation within the sector, with a number of mergers and acquisitions over the past 12 months. The most recent, and largest to date, is Howden’s acquisition of Barnett Waddingham, creating the fourth largest pensions and employee benefits consultancy in the UK.
Following the completion of this deal Howden will employ over 10,000 people in the UK working out of more than 200 offices.
In terms of the company’s employee benefits business, this acquisition means Howden will be able to offer the full range of employee benefit and pension adviser services to corporate clients working across both the public and private sectors, alongside its ability to offer health, life and specialist pension products to individuals.
In total the firm will have 4,000 expert advisers to corporates, and will deliver a combined revenue in the region of £500m globally.
Talking to Corporate Adviser, Glenn Thomas, CEO and UK health & employee benefits and global practice leader at Howden, and Andrew Vaughan, senior partner Barnett Waddingham, point out that there are obviously synergies between the two companies — and, just as importantly, relatively little overlap in their core services.
“Howden’s strengths lie in the employee benefits and health and wellbeing market, as well as operating a wider broking business, which creates a huge number of client opportunities,” says Thomas.
In contrast, Barnett Waddingham is a specialist pension advisory firm which offers investment, actuarial risk and insurance consulting services.
“From the very start of this process, we could see the attraction not only of being part of Howden, but adding to their offering,” says Vaughan. As Vaughan points out becoming part of the larger group is an effective way to continue to grow their business, offering pension advisory services to Howden’s client base — not only in the UK but overseas, given the firm now has an employee benefits business in 39 countries.
Future ambitions
Thomas says this acquisition makes the company into a “real powerhouse in the UK in terms of employee benefits”.
“The range of services we’ll now be able to offer means we are capable of competing for any client in the UK, whether they are a major multinational or SME,” he says.
Since Thomas took the helm at Howden’s employee benefits business in 2018, the business has been on a steep growth trajectory — delivering a 52 per cent compound annual growth rate.
Expanding its pensions advisory capabilities is the next step in these plans, Thomas explains. But he adds that he doesn’t see the acquisition of Barnett Waddingham as being the end point of its growth ambitions. Instead he says this deal means Howden will be well placed to challenge and win market share from larger rivals.
For many years the consultancy sector in the UK has been dominated by three big players: WTW, Mercer and Aon — all of whom focus predominantly on larger corporate clients, many of which will be multinational businesses.
“If you look at the history of Howden you can see we have enjoyed some fantastic growth and this is just another step when it comes to expanding our business and broadening the services we offer.” Thomas says: “This latest acquisition isn’t the end of the process. We’ve a long way to go yet and I’d certainly hope to be challenging the top three. I’m optimistic that we’ll overtake them to become a top three player within the next few years.”
Thomas says that one advantage Howden has over its rivals is that it is UK-based, with the ‘big three’ all global firms, headquartered in the US.
“When you look at the growth that both Howden and Barnett Waddingham have achieved over the past decade it’s clear that we are a Great British success story,” says Thomas.
His championing of Howden’s domestic success certainly chimes with the current mood music, with politicians looking for ways to drive investment into the UK economy and boost home grown businesses. The government has also identified the financial, professional and business services as key growth sectors in their industrial strategy.
The firm is proud to note that the business secretary Jonathan Reynolds described Howden’s acquisition of
Barnett Waddingham as a “major vote of confidence in our investment environment that helps cement the UK’s status as a services superpower”.
And in a world where major economic powers are becoming more protectionist and inward looking, perhaps UK businesses will be looking to support domestic business when it comes to buying goods and services.
Complementary culture
This focus on growth, and the lack of overlap in services, means that there are no widespread redundancies planned as a result of this acquisition. “We’re seeing this as a way for both businesses to continue to expand, so hopefully we are looking to hire more people in future, rather than losing jobs,” says Thomas. “This acquisition is very much a growth play, not a cost cutting exercise.”
Vaughan says that he thinks both businesses have a complementary culture, as well as a good fit when it comes to services — and this is just important, not only when it comes to successful integration, but to drive the business forward.
Both Vaughan and Thomas say that this lack of overlap should also minimise disruption for existing clients. With Barnett Waddingham effectively operating as a separate entity for the time being, both are confident it should be business as usual for clients, with minimal personnel change in the near future.
Vaughan points out Barnett Waddingham has itself enjoyed 35 years of continuous growth prior to this acquisition. He says he hopes the company’s principles, which helped drive this growth, will continue to flourish under new ownership.
“Every business talks about ‘culture’ — and each business will describe its own culture in a different way. But when we first started talking to Glenn and the team at Howden, and as these negotiations progressed, one thing that struck me was the similarity in terms of culture. I’d say we are both people-first businesses, that are focused on attracting and developing our employees, but we are also very much service led businesses.
“If you get this culture right, you attract and retain the most talented people and this should ensure you win new clients and you’ll have a successful growing business.”
Thomas adds that this is an important element to take into account when looking at acquisitions. “We’ve been looking to expand the pension advisory service. But the important thing was to identify the right partner, there has to be the right cultural fit, as well as offering the pensions services that we are looking to add to our service proposition. There has to be the same entrepreneurial outlook and the same attitude towards people and client service. We have been prepared to wait to find the right partner.”
Thomas says that Howden, despite its exponential growth in recent years, still sees itself as primarily a ‘family business’ — albeit significantly larger than the one that was formed in 1994 by David Howden.
This is reflected in the fact that a sizeable proportion of the staff are shareholders in the business. “We are one of the largest employee-owned businesses in the country” Thomas says, with 5,300 of the 22,000 Howden employees holding shares in the group. The option to buy shares in the business will be extended to all Barnett Waddingham employees in due course.
Notably, Barnett Waddingham’s working partners will also reinvest into Howden — underlining their long-term commitment to this new enterprise.
“It reflects the wider approach of the business,” Thomas says. “As David Howden also says to employees: ‘You don’t come in each day to work for Howden. You come in and help me build a business.’”
Global ambitions
In the near term the two businesses will maintain their own identities, with Vaughan remaining in charge of the Barnett Waddingham team, which will operate within Howden’s larger global employee benefits business.
Vaughan will have a place on Howden’s board, with Thomas taking a place on Barnett Waddingham’s board. However over time the Barnett Waddingham brand will be phased out. “At an agreed point in future we want to adopt one brand. This clearly makes sense as a global business and as we are trying to expand our footprint overseas,” Thomas says.
“Clearly if the Howden brand is already known in 55 countries, and with an employee benefits presence in 39 countries it is sensible that we bring those brands together, although this may not be for all services. But this will be at a time when it’s right for clients and the people within the business.”
The Barnett Waddingham name has been around for 35 years. How does Vaughan feel about this brand disappearing. He says: “The Barnett Waddingham brand has served us well over our 35-year history, being synonymous in the eyes of our clients with expertise, trust, and freedom for fresh ideas. As we move into this new chapter for BW, I’m really excited to see the brand evolve to reflect our combined offer with Howden.
“The Howden brand is increasingly recognised globally thanks to its reach across 55 countries, alongside their 200 UK locations. Their brand is further elevated through high-profile brand sponsorships such as the British and Irish Lions, Ascot Racecourse, and the Emirates Great Britain Sail Grand Prix Team.
“We know that the Howden business is associated with excellence, innovation and service. By focusing on these strengths, I am confident that our joint message to clients and our people remains hugely positive and forward-looking, reflecting the dynamic and growing nature of our combined business.”
BOX: CV background
Glenn Thomas – CEO UK health & employee benefits and global practice leader Howden Group Holdings
Thomas has worked in the employee benefits sector for more than 25 years, joining Howden in March 2018 to build the business’s employee benefits operations in the UK and globally.
Prior to this he was one of the founders of the Jelf Group and CEO of Jelf Financial Services. Following Jelf’s acquisition by Marsh & McLennan in 2015, he became a partner in the global business solutions division of Mercer Marsh Benefits.
Andrew Vaughan – senior partner Barnett Waddingham
Vaughan has over 40 years of experience in the pensions industry, advising corporate and trustee clients – primarily FTSE 100 (or equivalent) organisations and major multinationals on actuarial and related matters.
After spending 27 years at Mercer, where he was a senior partner, he joined Barnett Waddingham as a partner in 2011 and was appointed senior partner in 2020. During his time in this role the firm has grown organically by around 70 per cent.
Vaughan has had extensive engagement with government and related agencies through various industry roles, including the DWP, TPR, and PPF. He has served as chair of the Association of Consulting Actuaries, chair of the International Association of Consulting Actuaries and is currently on the Court of the Worshipful Company of Actuaries (WCA).
