Why Newcastle Building Society is taking over consultancies

With an advisor academy and an eye on acquisitions, Newcastle Financial Advisers, like many firms in the industry, is focused on growth.

But what sets it apart from other companies is the fact that it is a consultancy and a wholly owned subsidiary of Newcastle Building Society.

While one of the effects of the Retail Distribution Review has been a decline in the number of advisers employed by banks and building societies that have traditionally catered to mass market customers, Newcastle Building Society is bucking this trend.

“As we celebrate our 20th anniversary, we have found a model that allows us to buck this trend by offering financial advice to anyone, wherever we can – because we have no minimum investment,” says Iain Lightfoot, managing director of Newcastle Financial Advisers.

“So we don’t deliberately try to focus on the high net worth market, which is where a lot of the financial advice market has moved to. That doesn’t mean we don’t have the knowledge, skills and capabilities within the business to provide advice to high net worth individuals, because that’s what we do.

“But just as much of the advice we provide is about supporting clients who are members of a building society. This gives us the ability to provide advice regardless of the value of the investment.

“For many years we operated in a space that many other banks and some building societies had left. And that actually served us very well, and we believe it served our customers and members well.”

Our vision is to double the company’s turnover within the next five years.

Iain Lightfoot

The Openwork Partnership’s appointed representative, Newcastle Financial Advisers was established in 2003. The building society’s annual report and accounts at the time stated: “This is a major new venture for the society and, importantly, it means that the consultants providing financial advice are employees of the Newcastle Building Society Group, trained to our rigorous standards.

“Having our own financial advisors available across our branch network and head office is an exciting development for the community.”

Fast-forward two decades to the 2023 annual report and accounts, the building society’s chief executive Andrew Haigh said: “Demand for accessible, face-to-face financial advice remained strong in 2023 across the communities we serve, with our skilled team of expert advisers from our wholly owned subsidiary, Newcastle Financial Advisers, delivering more than 9,000 meetings.”

The core proposition is a financial adviser in every Newcastle Building Society branch, except for small branches where the adviser is combined between two. The current network of branches covers the North East, Cumbria and North Yorkshire, alongside a standalone financial advice centre in the town of Pickering.

In July, Newcastle Building Society opened a branch in the North Tyneside YMCA community building, employing a financial advisor

In July, the building society opened a branch in the North Tyneside YMCA building (pictured), which, in addition to the YMCA gym and café, also houses a financial advice service, in line with the co-operative’s core mission.

“No implementation, no fees”

As well as providing advice on the high street and requiring no minimum investment, Newcastle Financial Advisers only charges clients if they decide to implement the advice. Potential clients can also view a menu of advice fees and charges online.

If clients decide to take initial advice, they can pay the initial advice fee as a percentage of the amount invested or on an hourly basis and then choose from the following levels of ongoing service: ongoing advice with annual review, ongoing advice with biennial review or on-demand advice.

But is the “no implementation – no fees” model difficult to implement profitably?

“We believe that if a customer immediately thinks they need to sit down and talk to a financial advisor, that is not in line with our desire to provide them with authentic, open and accessible financial advice,” Lightfoot says.

“Does it raise any concerns or challenges from a commercial perspective? Not really.

“We will only move from an initial meeting to a referral meeting or to doing work for a client when, from the client’s perspective and ours, we are confident that we will be able to add some value.

“So when we get to the stage where we ultimately make recommendations to clients, the vast majority of those recommendations are because we got to know the client during the advisory process and we were confident that we would be able to work together in the future.”

Five-year plan

Like other firms, Lightfoot says the acquisition is a key part of Newcastle Financial Advisers’ plans to grow. In June, the firm announced it had acquired Keith Dyson Financial Consultancy, its third deal to date.

“We have a vision of more than doubling our business in the next five years,” says Lightfoot. “I wouldn’t want to put a number on it because it’s really about helping more customers across the North East and North West.

“Acquisition is one way we can do that from a financial advisory perspective. We see ourselves being more active in that space in the coming years than we have been in the past few years.

We believe that in addition to acquisitions, there is also an opportunity to increase the number of financial advisors in other locations.

Iain Lightfoot

“We want to be more open to acquisitions… We want to grow the number of advisors, and acquisitions will be part of that.

“However, we also see an opportunity to employ further new advisers within the company, not necessarily working directly in Newcastle Building Society branches.

“We believe there is an opportunity in other locations, beyond the acquisition, to also grow our financial advisor base. That doesn’t necessarily mean we have to have a branch in those locations as well.”

As with the two previous acquisitions of Newcastle Financial Advisers, Keith Dyson Financial Consultancy was a jointly appointed representative of The Openwork Partnership. Newcastle Financial Advisers is one of the largest firms in the network, and keeping the acquisitions within the network is deliberate, says Lightfoot.

“We see real potential in the coming years to acquire other financial advisory firms. Initially, we are focusing on the space of representatives appointed by Openwork. It is clear that the propositions are already tailored to many degrees, and it also gives us the opportunity to integrate clients as efficiently as possible.

“We have a number of active conversations underway to potentially acquire additional Openwork practices in the future.”

Iain Lightfoot’s Career Story

Financial Advisors in Newcastle

Managing director (2023-present)

Armstrong Watson Financial Planning & Wealth Management

Managing director (2021-2023)

Joint Managing Director (2018-2021)

Director of Operations and Business Development (2017-2018)

Skipton Building Society

Financial Advice Distribution Manager (2015-2017)

National Distribution Manager (2012-2015)

Head of Department (2004-2012)

Regional Manager (2002-2005)

Financial advisor (2000-2001)

Allied Dunbar

Financial advisor (1997-2000)

While Lightfoot says he would not put a specific number on Newcastle Financial Advisers’ growth ambitions, he does say: “Our total assets under management are approaching around £900m. Our intention is to more than double that over the next five years.”

But Lightfoot adds: “We actually want to double the number of clients we can help and take care of. We believe we can really help clients even if they don’t necessarily take our advice and product.

“Because the client may be meeting the advisor for the first time, and we can add value during that conversation.

“But ultimately we can agree that it’s not the right time to move forward with formal advice. So we’ll never see it on the balance sheet or in our assets under management right away, but we were still able to deliver our objective for this client.”

Then Manchester

In addition to acquiring the financial advisory businesses, Newcastle Building Society merged with Manchester Building Society in July 2023. At the time of the merger, the latter had no branches.

In its 2023 annual report and accounts, Newcastle Building Society said: “We operate from 32 high street sites across the North East, Cumbria and North Yorkshire and, following our merger with Manchester Building Society in 2023, we are considering how we could expand across the North West under the Manchester Building Society brand.”