JM Glendinning’s Paul Glendinning and Nick Houghton tell Andrew Pearce how they are building the broker around talented individuals and why they want to keep the family feel at the firm
▶ How did the broker begin?
Paul: The business was set up by my parents, John and Joan Glendinning from the back bedroom of a semi-detached house in Otley. My father’s background was financial services and broking and he chose to go it alone. He got some support from a couple of his customers and off he went in 1972.
I joined in 1986 making teas, coffees and doing filing. I worked my way up from office junior on motor and home quotes and claims before getting shipped off for proper training at Cornhill, now Allianz, for four or five years.
I re-joined in 1994 and went knocking on doors to drum up commercial business. From there we continued to grow organically and today we are a group of businesses with revenue of between six and seven million pounds. There are four elements to our group: insurance, financial services, health and safety and recruitment.
▶ How did your paths cross?
Nick: Glendinning was one of our biggest customers at Broker Network. When I knew I was going to leave I spent a year planning what I was going to do. During that process Paul and I had a conversation about what he was looking to achieve. I said ‘actually there’s something that I’m trying to achieve here and should we have a conversation?’ We went out and got horribly drunk together and at the end of the evening…
Paul: It was signed and done.
Nick: We then spent six or seven months just putting each other off because it felt a bit too good, a bit too easy. We set some ground rules from the start in terms of role and responsibilities and we shook hands in the summer. It’s been a rock and roll first 14 months.
▶ What are the broker’s strengths?
Nick: Great businesses employ great people – we’ve gone out and hand-picked people. We’re bigger than the average broker so that gives us some competitive advantage and we’ve got a great group proposition. We can punch well above our weight.
▶ What are your main insurer relationships?
Nick: The best relationships are with the likes of Axa, Allianz, Fusion, Aviva and Zurich, so we’ve got a handful of quality markets. You’ve got to accept that they have to make money. Insurers can say no to everything and still survive so we need them to say yes to us. It’s a bit like being in a marriage, you fall out but actually you don’t want to get divorced because you still want to have a relationship. Sometimes it’s about backing down and sometimes it’s about holding your position.
▶ What’s your staff ethos?
Nick: Have a plan, write it down and tell everybody so the business knows the journey you’re on. We’re not sat up in Paul’s office plotting and not telling anybody, everybody is on the journey with us.
▶ What is the plan?
Nick: When we sat down 12 months ago our plan was to double the size of the business in four years. We didn’t want to make an acquisition because we didn’t want to create debt. We’re debt free which is a great place to be as it doesn’t bring any undue pressure. We were going to grow by recruiting some good people, bring in some account execs and set up a couple of joint ventures. We’ve set up a business in Newcastle [broker start-up led by ex-Towergate regional MD Neil Forrest] and we’ve recruited 19 people. It’s been a busy year.
▶ Are there any acquisitions on the horizon?
Nick: We have launched a joint venture with Townends Insurance Brokers [in North Humberside] – it is connected to a firm of accountants. They were looking to work with somebody that would help them grow and thankfully they chose us.
Paul: It’s coming under the JMG brand, as JMG Townends.
Nick: We’ve set up JM Glendinning group and under that we’ve now sat insurance broking. It’s a separate limited company and we’re going to have some fun growing it together. The accountancy firm could have gone anywhere with the opportunity. Any broker would have done a deal with them but they chose us. There’s an angle for the broking business and accountancy to grow on the back of the relationship, we’re very excited about that.
▶ What is JMG Townends’ business income?
Nick: It is in the region of £220,000 of commission and I think we can take that to £500,000 in two to three years.
▶ How did the opportunity arise?
Nick: We haven’t gone knocking on someone’s door saying we want to buy your business – we have reacted to an opportunity that presented itself. I knew Adam [director and co-owner] just through networking. You could argue it’s a toe in the water to our first acquisition but the business wasn’t up for sale, they wanted to work with somebody that could help them unlock opportunity.
▶ What are your 2014 targets?
Nick: Broker income is around £3m and that’s growing at a rate of about 36% year-on-year. We’ve grown this business in 12 months by the same size of your average broker.
Paul: We’ll continue to look for opportunities. I would expect that we would take on another 10-15 people and have another couple of business start-ups or another investment in an individual like we did with Neil in Newcastle.
▶ What have been the main growth drivers?
Nick: Backing the right horses when it comes to picking people. Neil is a great example. He came into the market and is too good a person not to build a business around. He was in a similar boat to me, had grown up in a corporate world and was looking to back his own ability. So we backed Neil and the business is growing at a phenomenal rate.
▶ What attracts you to potential recruits?
Nick: When you look them in the eye and can see they’ve got some fire and ambition. One of my favourite sayings is recruit for attitude and train for skill.
▶ Is market consolidation working in
Paul: It brings a lot of opportunities, there are a lot of good people working for some of the consolidators. The consolidators are consolidating the consolidators, which creates unrest and we are a great home.
Nick: There are also lots of smaller brokers just stagnating. If you’ve got some fire in your belly we are a home for that type of individual.
▶ What’s the broker’s long-term goal?
Nick: We set out to double in four years and I think we’re going to do that in three. It’s difficult to look that far ahead but I believe we can make this business a top 65 broker. We’ve already hit £15m premium – we’ve put on just shy of £5m premium growth over the last 12 months. We can take the total up to between £50m and £60m and still retain the family feel. If I ever felt that I was turning this business corporate I would have a very serious word with myself.
▶ And the biggest challenge going forwards?
Nick: Technology and how the consumers of tomorrow are going to interact with us. The best examples are banks. Go back 10 years and think about your relationship with your bank and look at the transition we’ve had with online and telephone banking and the way you use a bank nowadays. Technology is our biggest opportunity, and our biggest threat.
▶ What is your biggest broker bugbear?
Nick: We could present ourselves as an industry better. People have a dim view of insurance, they think it’s boring, grey and a necessary evil but we underpin society. No planes would fly without insurance, no cars would drive on the road and local businesses would not be able to grow. We underpin the communities that we work in, we provide employment and I don’t think that’s how people view insurance.
▶ Where do you see yourselves in 10 years?
Nick: We’ll be a successful, much larger business. It would be nice to think that Paul can attempt to beat me at golf, not that he’s competitive! We’re having a vegetable competition this year, we’re both growing some veg at home so Paul, Mr Competitive, said: “Let’s have a competition.” I’m a very keen gardener so we’re having a carrot, cucumber and tomato growing competition. He’ll go to Sainsbury’s and buy them off the shelf.