Next up in our HomeGames series of conversations with platform chief execs is AJ Bell chief executive Andy Bell - watch the full interview between Mark and Andy below

When I look back, I would say I've probably seen ourselves as a listed business since about 2007, even though we didn’t actually list until December 2018.  

That’s because 2007 was when we took investment in from Invesco.

The commitment I made to Mark Barnett and Neil Woodford at the time was to say: “Look, you can invest in the business but you're not having a seat on the board and you can't have a shareholders agreement. But in return, what I will do is run the business as a plc for you. Therefore you'll get that same level of governance and visibility.”

And we did that for them from 2007 for 11 years.

That was a great learning curve for me on the way we had to present the business from a governance standpoint.

A lot of businesses I see list and they scurry around for six months pre-listing and six months afterwards trying to get the board, sub-committees and wider infrastructure in place.

Yet as a regulated business we’ve had all of those board structures for many a long year now.

I would go and sit down with Invesco twice a year and run the meetings as if they were interim or annual results presentations. So when it came to listing, a lot of the things people warned me I wouldn't like didn't bother me.

You get a perspective on your business and industry when you see it through the eyes of an analyst. So I've really enjoyed that aspect of being a listed business.

I’ve always been a very private person, but I recognise that when you oversee a public company, then you are to an extent public property.

What I’ve also learned is you have to be on your guard more often than in a private company, where you can shoot from the hip a little bit more.

I’ve always been very keen to challenge the status quo, whether that’s to do with pensions legislation or FCA rules, and I’m very happy doing that, but perhaps I’ve also got a bit more conservative in my old age in my dealings with the press.

That said, I think without a doubt the best working day I've ever had was the day we listed. It was just the whole experience.

I'd originally built it up in my head to a place where I thought it was going to be great.

But then in the run-up to it, we went down to the London Stock Exchange at Paternoster Square, and you realise you're just stood on a balcony and reception, and that you'll be pressing a phoney button, and I thought it might be a let-down for family and friends.

We had probably 60 people down there, lots of family and friends, and staff who'd been with us on the journey.

And yet it actually turned out to be quite emotional.

It was hearing that countdown and realising that in 10 seconds, the market is going to give its view as to whether they’ve found you out or not, the fact that you’re this lad from Liverpool who doesn't really know what he's doing, who's now managed to bumble his way onto the stockmarket, and the idea they're going to see right through you.

But it's been nice they haven't found me out yet.

The path to listing

We set the business up in 1995. By around 2002 to 2005, we started to get a number of approaches to buy the business.

As anyone who’s got a business knows, when somebody knocks on the door and says they’d like to buy your business, immediately you’re flattered. Then you start to wonder what your business might be worth.

But what you don’t realise is that different people in your senior team will react differently.

For Nicholas Littlefair, who I set the business up with, I think these discussions unlocked his desire to sell, whereas it actually hardened my desire to stay in the business.

But when the genie’s out of the bottle on this kind of thing, it can be quite difficult. We came close to selling on several occasions, but deep down I knew it wasn’t for me.

So I started thinking about finding an alternative route. That was the premise on which we went to see Invesco.

We then discussed listing every year, but the timing wasn’t right. Then we had all the Brexit uncertainty.

By the time the listing came around in December 2018, we were still in the eye of the Brexit storm. People were saying: “You can’t really be floating the business in this climate can you?”

But we’d done the work we needed to. Clearly, we could have stayed private forever, but ultimately we decided that the best alternative solution to a sale was a listing.

I would say it’s proved to be good for us – I don’t ever for one second look back and regret it.

If I’m honest, one of my biggest concerns in the longer-term run-up to the listing was that if we list all the staff will sell their shares and leave, and I’d be left on my own.

As a result of the IPO we made a lot of people in the business very wealthy, including myself.

I've no doubt that over time, we will have altered people's retirement intentions, whereby they may go a bit earlier than they might have done otherwise.

I was at pains to make sure that everyone who was working for us at the time of the IPO had shares.

I remember a conversation with someone who said one of the issues with this process is you're going to have the 'have nots' and the 'have lots', which creates a challenge. Not one that can't be managed, but a challenge nonetheless.

We refer to it as the ‘purple Porsche’ syndrome. That is, if I turn up and find a purple Porsche in the garage underneath the office, you’re out.

It was really just a message to say, you might have done well, but if you start flaunting it in this business, it won’t be taken well.

Our business culture is one I’ve nurtured for over 25 years. All the listing was about was bringing us a share price, and if anyone was to start acting or behaving differently, or thinking we’re a different type of business, they probably wouldn’t last anyway.  

I’m pleased to say that actually, the reaction from staff has been brilliant.

All my senior team who went through the IPO with me are still here now. There are probably other people who have had a life-changing amount of money, but still enjoy coming to work for their own motivation.

The thing I come back to is if you treat people well, with respect and in a fair and honest way, then they’re more likely to stick around than not.

Platform market activity

In adviser land, there’s almost this 20-year cycle where the big guys buy up all the small guys, and then eventually realise it’s not going to work. It feels as though we’re at that turning point now for platforms.

In the D2C world, you can see why acquisition is a good strategy, and there’s that one-to-one relationship with the customer base.

But I think it’s actually harder to buy adviser platforms, where people embed their chosen platform into their processes. And of course, it’s very disruptive if a platform changes IT or changes through acquisition.

What’s interesting with us coming to the market, Transact just before for us, and the likes of Hargreaves Lansdown as well, is that people see the market multiples we attract, and once that happens the private equity boys’ ears go up.  

On paper these deals are almost alchemy – it’s about taking the cost out and putting it all together, revenue synergies, the operating margins to be had in the future, and 40 times forward earnings multiple.

That theory's great, but it's not without pain.

While I personally discounted private equity for our business long ago, I think it’s just a sign of where we are in the market.

Private equity is drawn to where the action is, so to my mind it’s recognition that we must be doing something right.

Five to 10 years ago, we were debating whether platforms would win out against insurers and asset managers, nowadays people don't have that debate anymore.

Insurers are insuring which is what they should always have done.

Asset managers are trying to get back into the platform game, they've lost control of distribution and are reliant on platforms to deliver that for them. All that means more competition in our space is inevitable.

But you need scale, to do a start-up is very difficult in our sector. There’s a lot more M&A now than when I and others set up. So I think we're in for a really interesting time.

Lockdown, meme stocks and investing

When I’m speaking to our marketing team, the conversation is geared around life events – retirement, redundancy, marriage, inheritance are all things which drive a personal finance review.

Covid has been a life event and a half, and what we’ve seen is it made people stop in their tracks and think ‘I need to check I’ve got my finances in order’.

It was quite clear from the early days that while the government was providing short-term support, any notion that long-term support was going to be there to underpin our retirements was folly.

That triggered a lot of people to go and dust off those policy documents.

These are people with perhaps £30,000 to £50,000 to invest, who might be best described as a disenfranchised customer.

They might have been sold an investment by their bank previously but aren’t quite able to afford advice. Those are the people we find coming to us on the D2C side.

What we saw a few months back with the so-called ‘meme stocks’ was bordering on barking mad. We saw some spikes in trading during that period, but it isn’t our market.

What we saw were almost the ripples at the edge of the tsunami. We've done some surveys on those people buying GameStop and the US cinema group AMC Entertainment.

Among the findings was that 92% of investors were male, and around 50% were under 30.

In another survey, we found that 30% of the people who’ve invested in crypto stocks aren’t willing to lose any of the money. You just have to shake your head.

I hope this will just turn out to be an interesting footnote in history and that it doesn’t start driving the markets.

You could argue it's getting young people to engage with investing, but I would say an awful lot of the people who've gone into this have done so without any real knowledge of what’s involved.

Reflections on building a business

When it comes to building a business, I think you’ve got to have a conviction and a belief in what you’re doing. But one of the things I’ve learned is you need to be willing to listen to other people as well.

Doing it on your own can be difficult. I’ve always been fortunate in having really good right-hand people around me.

I think sometimes people can make the mistake of thinking they need to invent something new to go and set up their own business. You don’t, you just need to do it better than anyone else.

In the early days I made a promise to myself that if I ever woke up in the morning with a knot in my stomach about something work-related I would do something about it. And I did get to that point.

In my first job as a trainee actuary, I was working on with-profit deferred annuities as a final salary contract.

I was always asking what was going on, and why we did things the way we did. The only answer I got was: “We’ve always done it that way”.

So I packed it in and went to play football in America for three years and did a bit of tennis coaching over there. I came back reinvigorated.

That was really the platform on which I set up on my own. It was that knot in my stomach, and I've never had it since.

There’s been bad days, don’t get me wrong. Setting up and building a business is hard work. But if you've got the get up and go, get up and do it would be my advice.