Interview: Partners&'s Barton & Reid

Phil Barton, CEO, Partners &

The easy answer to the question “when is a consolidator not a consolidator” is when nobody is being bought. Phil Barton and Stuart Reid spoke to Post senior reporter Emmanuel Kenning about their latest venture Partners&.

Earlier last month industry heavyweights Barton, pictured above, and Reid revealed their return to the market with Partners&, an offering backed by US private equity house Capital Z.

It bought MRIB and Independents, La Playa, CGI and Versatile to create a team of 140 people, based in nine offices across the South East, Midlands and South West controlling £65m of gross written premium.

“That’s where the consolidation stops,” CEO Phil Barton told Post, although on a never-say-never basis if the right deal came along it would consider buying in the north of Britain.

Simply put, there are no plans to “invest significantly in real estate” despite the fact the plan is to reach £50m of revenue with 350 staff in five years’ time.

“We wanted to bring an alternative solution to the marketplace, which is not consolidation,” Barton explained.

“It is much more about building a business based on the fundamentals of advice - on the acquisition of great talent, but not the acquisition of assets.”

The art of broking has become a rare commodity
Phil Barton

He had been working on the project since late spring last year after taking some time out to reflect on the broker of the future post leaving Marsh.

The more he thought about the market, including underwriting and claims, the more he became convinced it was ready for a reset

“It’s become incredibly focused on commoditising what is a complex proposition for clients and has moved away from advice,” he said. “The art of broking has become a rare commodity.”

In his view, the amount of M&A activity at eye-watering multiples was putting intolerable strain on business models and leading to short-term decisions to make the finances work.

“Some of the worst practices in the marketplace are a function of having to try and stretch the financial models to justify the prices that are being paid for assets,” he summed up.

Reid came on board as chair this January having been in discussions for a couple of months. He is also a shareholder in the business.

Reid on teaming up with Barton

“Phil is someone that I have got on well with and known for some years, despite us being competitors. He is a very good communicator, he’s very passionate and he’s a very hard worker which you have to be in these sort of businesses.

I remember, very vividly, our first meeting where Phil set out this strategy which was extremely compelling. So it’s not it’s not just Phil, it’s the whole deal.

Whenever you do something, you want to have a fundamental belief in it. I absolutely have a fundamental belief that this is different to virtually every business out there at the moment. And it’s one that will have great attraction.”

There is more than a bit of irony that two drivers of the consolidation boom are pointing at the downsides of consolidation. Reid created what became serial acquirer Bluefin while Barton was integral to Jelf’s expansion, sale to Marsh and ultimately merger with Bluefin.

When the pair were talking about teaming up they agreed consolidation had gone too far with a huge waste of disenfranchised talent in the industry.

They felt they could design a better proposition.

“That’s much easier to do when you’ve got a blank piece of paper than when you’re trying to reshape an already large and cumbersome business,” Barton explained listing no legacy or complexity caused by multiple acquisitions as a strength of Partners&.

“If you don’t learn from the mistakes of the past, you’re destined to repeat them,” he continued. “And we’ve learned from the good things that went on.”

Barton commented that the first phase of consolidation, up to 2013 was “excellent for clients” establishing better advisors with better resources able to invest in technology and learning and development.

“It created distributors that had a more balanced relationship with the insurer market and inspired some innovation around product and proposition.”

The second phase though, particularly the consolidation of the consolidators, coincided with the aforementioned eye-watering prices during the “chase for scale”. This, Barton observed, was the root cause of business models under strain.

It led to diminished claims propositions, leveraged administration fees and premium finance, overrider profits, unsustainable commission levels – all to make the financial model work rather than deliver a better service to clients.

If you don’t learn from the mistakes of the past, you’re destined to repeat them
Phil Barton

He promised that squeezing insurers for enhanced commissions was not on Partners&’s agenda. With no acquisitions pipeline to fund, “we’re not playing that game”.

“I’d much rather have flexibility from an insurer to deliver a better outcome for clients whether that’s the underwriting stage or at claim than squeeze one or two extra points of commission.

“Our success will not be governed by gaining a small commercial benefit from a commission negotiation. We will win by having the best client proposition and having the ability to attract the very best advisors.”

That said the buys thus far cannot be ignored. All the businesses have been bought outright to create scale and set up a Financial Conduct Authority authorised operating platform.

They were chosen for client service and advice levels, track records of investing in people and having proprietors prepared to invest in the new vehicle.

The executive team

Phil Barton, CEO (ex Jelf CEO)

Jonathan Vickers, CFO (ex Jelf FD)

Julia McKee, COO (ex Jelf strategy & innovation director)

Natalie McClean, HR Director (ex Jelf group HR director)

Chris Jelf, group commercial director (Jelf founder)

Mark Boon, executive director (ex La Playa CEO)

Lee Davey, managing partner, South West (ex Jelf regional managing director)

Ed Finch, managing partner, South East (ex MRIB MD)

Dan Wilkinson, managing partner, Midlands (ex Willis, RSA and CGI MD)

None of the business were for sale, Barton remarked, meaning there was never a price auction.

“Every one of those businesses is aligned to the vision that we have for Partners&,” he insisted.

All the companies come with a specialism, a crucial factor with that future vision being one of a multi-specialist rather than generalist business.

The quasi start-up has invested in Acturis technology. None of the businesses were with the software company before. MRIB and its subsidiary brand Independents moved to the platform and rebranded on the 6 April launch day.

All the others will do so throughout the remainder of 2020 to create a single brand on a single IT platform.

“Most brokers, frankly, maybe use 20%-25% of the capability that Acturis can deliver,” Barton said.

“We’ve been designed from the outset to utilise a significant proportion of the Acturis’ capability. We are a business for the 21st century.”

This ought to lead to more cross selling opportunities with Barton claiming that he learnt from his experience at Jelf to breakdown internal barriers.

“Because we had a greenfield site, we were able to design remuneration systems and corporate structures to enable and encourage advisors across the broadest spectrum,” he stated.

“Frankly, internal P&L gets in the way of doing what’s right by clients in the majority of traditional advisory and broking businesses.”

Stuart Reid, chair of Partners &


Alongside this Partners& has built an employee benefits business.

“It’s quite rare to have an insurance broker with employee benefits alongside so it gives the customer the one place to go, it is very powerful actually,” said Reid.

With the exception of the not-a-priority buy in the north, the strategy to hit the growth target of more than trebling the business in three years is underpinned by recruiting the “fantastic advisory talent which is pretty disenfranchised with its present home,” Barton detailed.

It was a route that Lorica planned to take for many years. But it never quite reached the land of profit before its eventual sale to PIB in March 2018.

“I’d like to think that we’re ploughing our own furrow,” Barton responded when asked why Partners& could make the approach work. In particular he pointed to Capital Z holding investments for eight years on average and being a sector specialist.

The PE house’s portfolio has consisted of investments in Catlin, Argo, Hamilton Insurance and Lancashire over the years.

“That long term nature of our investor enables us to take a long term view and the acquisition of talent is a longer term play,” Barton accepted.

“This is not about scaling the business and selling it on, leveraging that scale with our insurer partners. This is about building a better business through the acquisition of great talent. It is almost an invitation only club.”

Most of the very best talent in the market has a specialism
Phil Barton

He added: “The problem I would have suggested with Lorica is that they were undercapitalised and we’re never able to invest at the rate in which we intend to.”

In keeping with the theme, new employees will be specialists.

“Most of the very best talent in the market has a specialism,” Barton suggested. “That’s how they become experts.”

One route then is ‘micro economic’, finding the right client advisor who fits with the culture. They are the people who will define which specialisms Partners& develops.

The second approach, according to Barton, is ‘macro economic’. Analysis of the UK economy will determine the sectors that are going to grow at a more rapid pace than the market as a whole.

“You then specifically target clients and partners who are preeminent in those sectors,” he said.

Reid is on board with people first approach. He has known Barton for years and talked in the past about working together.

Barton on teaming up with Reid

“Stuart is a highly regarded and hugely respected operator in the market. We competed for the best part of 10 years when I was CEO of Jelf and he was CEO of Bluefin.

We had many a conversation about ‘I wonder what it would be like to work together and build a business based out of the best of our experience’.

And that’s what we’re doing here. We have no intention to be the biggest. We are not on the escalator towards huge scale. But we have a passion about building the best business, challenging the market in some of its practices and getting back to the fundamentals of advice rather than price.”

He left Gallagher in October 2016 where he was UK retail CEO but recently returned to the market as chairman of sharing economy insurance specialist Pikl.

“I had been flirting with PE and I’ve had various offers from various places,” he confided.

“But when Phil was setting out the strategy it was extremely compelling.”

Having run businesses Reid shared the “particular issues” he saw facing the broking market.

“I use the expression that many people in the businesses that I ran used to look dewy-eyed out of the windows at the smaller brokers able to give a slightly different client service, a different proposition than we were able to fulfil in the business of some size,” he began pointing to the gap between cause and effect and the lack of access to senior managers as draw back.

This very much appeals because it got us back to where businesses should be
Stuart Reid

Now there is the ability to place cover where it should be rather than where it has to be, Reid continued.

“And as such, this very much appeals, because it got us back to where businesses should be, not where businesses, perhaps, sometimes have to be.”

It is the first extended indepth interview since Barton left Marsh in March 2019.

He had worked with Jelf from 2003 becoming insurance CEO in 2010 and then group CEO in December 2015 after its sale to the international giant.

He enjoyed the “fantastic journey” – when he joined Jelf it had 50 people and around £5m of revenue, it had £100m of by the time of the Marsh takeover and when he left it had 2800 people and almost £240m of revenue.

At Marsh he enjoyed bringing Bluefin and Jelf together as well as working with great and talented people.

“It was a fantastic privilege to be a part of that journey. I enjoyed the challenge of being a part of a global broker, seeking to develop a specialist, SME and mid market business.

“The reality is at some point I decided that I wanted to travel a different route.”

He declined to go into too much detail, preferring to look at the challenges across the market - slow decision making, a lack of accountability, bureaucratic processes, an inability to place business where most appropriate.

Phil Barton CEO Jelf


Pushed on Marsh he summed up.

“I wish them well. But it wasn’t a journey that I wanted to travel on.

“I wanted to see if I could do something different in the market and that’s why I left.”

The launch of Partners& has come as the coronavirus pandemic has swept the UK. As Huw Evans, director general of the Association of British Insurers put it recently, the government is dealing with the worst public health crisis in 100 years, and the worst economic crisis in 80 years.

Thanks to its preparation with Acturis the new offering had an IT infrastructure that enabled it to switch to a virtual environment.

“We found it very easy to transition the vast majority of the business into remote working in the matter of a day or two,” Barton recalled.

“The team has been very focused on serving clients and providing advice through this difficult period.”

There is no intention to furlough staff and so far there have been no changes to the plans drawn up over the past year.

While acknowledging there will be short term uncertainty Barton concluded: “I am confident that we will get back … onto our growth plan and strategy to deliver upon the plan as scheduled.”

Working with Chris Jelf again

The executive team consists of many familiar faces to the market and a rich vein of Jelf experience (see executive team list above), most notably with the return of founder Chris Jelf.

He has become a shareholder of the business and taken up the group commercial director role full time leading on private clients and employee benefits at an executive level.

“He’s an inspiration for any business that wants to put clients right at the centre of their activities,” Barton recounted.

“Around our executive table, if there’s any decision that has an influence on a client, Chris is there very actively shaping it. He plays a key role in setting the culture for the business around clients and colleagues.”

Barton described that over the last 20 years Jelf has primarily focused on financial planning and employee benefits. While he no longer advises individual clients, he is involved “as a stewardship director and an ambassador for the business”.

“Chris is a phenomenal client advisor. First and foremost, he has fantastic relationships and a superb network,” Barton said.

“He is excited about what we’re seeking to do.”

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