The link between financial services and golf is well documented – both watching and playing – after all, everyone knows just how much work can be conducted on the golf course. However, the link between financial services and football is nearly as strong. Almost everyone is a passionate follower of one of the big teams, and a remarkable number claim that they could have made it as a professional footballer, if they had not been forced to choose a career in personal finance for mundane reasons like longevity. Few however, can honestly claim to have performed at the highest level in both, but Mark Graves is one of them.
Graves began his football career as a 16-year-old straight from school, and it eventually took him as far as Plymouth Argyle, before being forced to retire early due to injury. Finding himself at a loss for the first time in his life, he then decided to enter financial services and the sales environment aged 23, becoming a financial consultant selling life assurance.
Relegated to the bottom rung, he very quickly set about rising up again through the various divisions, before, in 1990, he joined Countrywide as a financial services director within Mann & Co, and from there he became a managing director with Bairstow Eves.
Five years after joining Countrywide he transferred over to its rivals at Spicerhaart Group – a riskier proposition, as it only had between 40 and 50 branches at that time. Here he took on the role of managing director of its in-house advisory brand Mortgages Direct, and played a key role in building it up to closer to 250 branches, before quitting to set up Linear Financial Services in 2004.
Mortgages Direct has been making the headlines recently following the controversial announcement it is to drop this branding for Spicerhaart Financial Services, and have its network of brokers work under the brand of the estate agent they operate in (Mortgage Solutions, 6/11/06, p1). Initially unwilling to comment on the changes, Graves, when pushed, says he feels it is playing a ‘strategic game and is playing to its strengths’. He says: “My view of whether I think it is right or wrong is irrelevant. I think it has made the right decision, because it did not have a lot of choice – that is where its strengths lie. From a business point of view though, I think it would always be better to have your financial services as a separate entity within the same group, because you can never have a problem with treating customers fairly.”
Embracing TCF
Treating customers fairly (TCF) has become the mantra of mortgage brokers since Mortgage Day, and Graves is no different in this respect. While he categorically denies that he has anything against the Spicerhaart model, Graves thinks that TCF will have soon permeated the national psyche to the extent that large corporates like Spicerhaart could find that they are losing business to those with a model like Linear’s.
Linear Mortgage Network is based on the second of these models, and aims to place an independent adviser within two estate agencies. Working off commission, not fees, it remains an employee of Linear and is an appointed representative through Graves and ultimately Openwork.
Like many successful ideas, the concept of Linear seems so simple that it is hard to believe there are not many more like it already. However, for Graves, it was not the fear of the unknown that was the initial problem, it was being sure his plans would be a success. When he first set up Linear, he says people were always asking him why he did not do it earlier. In response to this he claims: “To leave and set up a small business with half a dozen people working for me was never the plan. I could always do that. But it is a different ball game to have a plan that says ‘in three to four years I want to have 50 to 100 consultants’. The key for me was to do it because I knew I would be able to succeed.”
Having said that, Graves claims to have quit Spicerhaart without thinking how Linear would actually work. With three months’ salary, he had that amount of time to sit down and work out what he was going to do and how he was going to do it.
What he came up with was a plan that convinced two of his colleagues from Spicerhaart – Roger Lucarotti and Jan Hunt – to throw their lot in with him, and also Openwork to take the unusual step of loaning him the money to get it up and running. Not as altruistic as it perhaps seems, Linear operates as an appointed representative of Openwork, which means the network is getting its money back with interest, but it also frees up Linear to concentrate on growing the business. Graves says: “There is no contractual obligation to stay with Openwork, but trust goes a long way in the way that I work. This is not to say that I will stay with it forever.”
Perhaps unsurprisingly, Graves frequently peppers his conversation with football analogies, and when he talks about Lucarotti and Hunt he compares it to when a new manager comes in and wants to bring his best backroom and support team with him. “When I left, the new person would probably have wanted to get his team around him, and so they left to join me at Linear. I could not possibly have done this without them – they made the same sacrifice and commitment as I did, and at first it was basically just the three of us.”
Apart from Lucarotti and Hunt, Graves says he refused to take any of the consultants who worked for him at Mortgages Direct at first, even though it would have made it easier if he had done. Nevertheless, as he says, nothing lasts forever. “I would take them now though, as we are three and a bit years down the line. But in the first year, it was important to me that people perceived Linear as something we were building from scratch rather than something I was just ripping out of my old company.”
Delivering the goods
Having secured funding, Linear had to start delivering and the next group which Graves managed to convince was estate agency Chancellors, which signed up for a five-year deal in 2003 that would see Linear provide its 54 branches with financial advisers. Commenting on this, Graves admits that without its support at the beginning, he could not have made it work to the level it has done. “It was a huge risk for Chancellors. I had no consultants and it still signed a five-year contract based on its belief that I would be able to deliver the goods on the long-term plan.”
Rather like the professional footballer he once was, he has now re-signed this contract just two and half years in, and last year signed another five-year contract.
With a new start-up currently numbering more than 70 consultants and with a target of more than 200, he is more aware than most of the dearth of talent coming into the industry from school and university. As a keen supporter of Mortgage Solutions’ recruitment campaign, Graves says he would like to look at raw talent to grow his business, but does not have the resources to promote the opportunities in financial services and then train people who are completely new to the industry. At the moment, Graves will not take on anyone who has not passed at least some elements of the CeMap qualification, but on Linear’s training course, which teaches new recruits the ways in which it needs things to be done.
However, he recognises the potential in those with little experience of the market, as many take to it like a duck to water, saying it is often more challenging to take bad habits out than learn some new ones. He says: “I foresee a situation where we will hope to take on people straight from school and university, but not until I have the support mechanism and the infrastructure to be able to do it.
“Our plan for this year is to take on eight people every month. But it is getting the balance right between recruiting the people and getting the branches on board. We get nearly 200 CVs a month – nearly all of which are from people who are in the industry in one form or another – and around 130 of these are judged not worth taking forward to a telephone interview. We do not have enough new, quality people coming into the market. The pool is definitely diminishing.”
Still, with interest rate rises finally appearing to choke off first-time buyers, if the market does suffer a correction rather than a soft landing, logic dictates that it will be the smaller, less experienced players who take an early bath, and financial advice will be an even less attractive career path. Suggesting this to Graves, he retorts that if there is a ‘meltdown’ in the market, then there will be fewer estate agents out there, but for those who remain, it will be even more important for them to have cashflow coming from financial services. “Some mortgage consultants will not survive a downturn, but the good ones are going to go to the ones that are strong and prospering. We currently have 70 people and 92 vacancies. As long as we maintain the demand ahead of the supply, we can keep growing.”
Casting the net
The other ways to try and ensure that any ‘bumps’ do not prove fatal are to spread the risk, and to diversify across Britain. Predominantly working out of estate agents in the South East during 2005 and the beginning of 2006, it has been gradually moving northwards, town-by-town, but the big change in the last six months has been the move into Scotland and Wales.
While Graves may be spreading the risk coming from localised downturns, he does not see this as diversifying as such, and he also refuses to follow others and look at the potential benefits of expanding the operation to some of the more profitable areas overseas, such as the south of Spain. Nevertheless, he says diversification is not an anathema and admits that the next stage is to broaden its focus through the development of Linear Wealth Management.
Explaining this, he says: “We have now been trading for three years and built a database of quality clients. We operate in a number of quality estate agents who have top quality clients with big property portfolios and £3m plus houses. We have an Inheritance Tax problem looming, which people are only just starting to get their heads round, and one of the areas that has completely gone in the last few years is the direct sales force, so where are people getting their customer service? People talk about treating customers fairly and going back every few years to make sure they have the best mortgage, but what about looking after the clients who we have identified have protection needs? I can see us moving into that in 2008.”
With ambitious growth plans and a clear understanding of the need to take on new talent, Graves is planning to take on the big boys in the premier league in the very near future. The only potential stumbling block appears to be the number of quality advisers available in the market, but then this is a problem many face. If the industry is to continue to grow, then it must increase the number of advisers, and that will involve working together – or teamwork as Graves would put it. n
