For the past 16 years, I’ve been the second generation part-owner of Informed Choice, a business started by my parents back in 1994.
A lot has changed during that time. The business has tripled in size and changed dramatically compared with the firm I joined as a 20-something on his path to becoming an IFA. What hasn’t changed all that much is the family dynamic, and the challenges and advantages that come from working with your parents.
From the early days of joining the family business, we recognised the importance of putting clear structure in place. A big part of that structure came in the form of monthly board meetings. Instead of debating and agreeing strategic issues on a daily basis, we started to run these formal board meetings, to an agenda, and bringing the big picture subjects to that forum.
That board structure has evolved over time. We’ve had a non-family member as a director of the business for the past six years. Andrew became a director in 2012, with Shelley taking this role in 2016 when he left to establish his own financial planning firm in the south west.
Later this year, we welcome a second non-family member director to the board, who along with our head of client services (who attends board meetings but is not a director) will result in a balance of three Bamfords and three non-Bamfords at board meetings.
Despite this shift in management responsibility, the ownership of the business has remained in the family for the past 24 years. As we look to the future, one option we are exploring very seriously is to sell a majority of our shareholding to an employee ownership trust, creating what Chris Budd refers to as an eternal business.
This change in ownership won’t immediately change the day-to-day running of the business, although it will mean handing more responsibility for management to members of the 14-strong team.
It does however serve as a more attractive option for a business exit than the various offers we have received (and turned down) over the years from wealth managers wanting to acquire a financial planning arm.
It certainly looks more attractive for our clients and employees than being swallowed up by a consolidator firm, with existing products no doubt churned onto their platform of choice in order to generate extra profits and so justifying the sale price.
Inside a family firm
There are moments of stress and high emotion when working in a family business.
Last year, when we started exploring strategic options for the business with a third party adviser, some tears were shed as we laid out our different preferences and vision. Being part of the same family does not always mean wanting the same things in life or for the business, and finding common ground can take work.
I was fortunate to have moved out of home before I moved into the business. As much as I love them, living and working with my parents might have been a step too far. The ability to live separate lives is important when you’re spending 40+ hours each week working under the same roof.
Earlier this year that separation took a further step, when I signed the lease on different offices just across the road from Informed Choice, allowing me to focus on building my digital media agency start-up.
Despite some healthy separation, we still have the occasional shouting match during board meetings and in the office kitchen. Thankfully these are few and far between since introducing non-family members to the board and hiring more staff. When emotions run high, it’s because we care so passionately; the business we have built is effectively another member of the family.
For financial planners considering introducing a second generation to their business, I would strongly encourage it. But I would advise starting with a well debated and documented strategic plan in place, and recognising the different needs of each family member. Don’t assume that sharing a surname will mean sharing the same goals in life.