Ruth Sturkey: The story behind Paradigm Norton
RUTH STURKEY is, without question, one of the key movers and shakers of the financial planning profession in Britain.
She has helped to build two highly successful planning firms. She has been at the forefront of the shift towards evidence-based investing and value propositions based squarely on proper financial planning. She has also championed greater diversity in the financial services industry and financial education in schools.
This is the first of a two-part interview with Regis Media founder ROBIN POWELL. In it Ruth explains how she got started and why, four years ago, she chose to merge her business, Red House Consulting, with the Bristol-based planning firm Paradigm Norton.
RP: Tell me about your original planning business, The Red House. How did that get started?
RS: The Red House came about, in many respects, because of my frustrations with the previous business that I had been working for. We launched in September 2007, just before the financial crisis.
I’d started working in financial services in the rather shady end of the mortgages sector in 1989, and I learnt very quickly the issues around selling and commission and churning and what have you.
Fortunately, I was able to navigate my way away from that and became a chartered financial planner, working for a national IFA. But there was a real mismatch, when I reflect on it now, between the way the business was being run and my own values. The firm was very short-termist. It was all about this year’s bonus and profits, with no thought for the future. It was very much a product-driven service.
I thought to myself: I’ve spent all my time getting chartered. What was the point of that? I got very disgruntled with the management of the business, and I started to be that really grumpy employee who moans! But one day it suddenly dawned on me: You may not rate them, but at least they’re out there and giving it a go. So, either put up or shut up. Give it a go yourself, or stop moaning. I think that was quite good advice that I gave myself!
I started to explore, with my co-founder Gareth Marr, and we just asked ourselves: If we start with a blank sheet of paper, what might our ideal firm look like? And that was the birth of The Red House, really. It was kind of a reversal, away from what I knew I didn’t like, into creating a vision of something that I could be proud of.
And what, to you and Gareth, did that ideal firm look like?
We did have a very clear vision on that. We wanted to look after a small number of successful clients. Those clients were likely to have accumulated assets of a certain level, or be earning over a certain level of income. We very much wanted to have clients who were going to delegate to us, because they could see the value of getting on and living their life and leaving the money stuff to us. So we were very clear about our offering, which was going to be cashflow-focused, evidence-based and very holistic. Therefore, we weren’t going to take orders from people. And they had to be happy to pay our fees, and see the value in that. From there we moved to more subjective things. For example, we wanted clients we found interesting, who we could learn from, and who we liked. We didn’t want to work with people whose company we didn’t enjoy. And that served us very well, to be honest!
Eventually you joined forces with Barry Horner and the team at Paradigm Norton. What was the thinking behind that decision?
Gareth had retired as a result of ill health in about 2012 or 2013. Linda, my other business partner, and I were leading the business forward and thoroughly enjoying it. We got to a stage, in about 2016, when I think I became conscious that we had built something of value. It was like holding a precious diamond or jewel that we’d created. We had a fabulous team and fabulous clients. But I was starting to feel tired, and so was Linda. We were both in our early 50s, and although running a small business is incredibly rewarding, it’s also hard work. As a business owner, you share the highs and the lows.
Linda and I had been talking for a couple of years about what our succession plans were. We would flit between wanting to take it to the next level one day, and the next day wondering whether we really had the energy. Then there were two things that happened in about September 2016 that really crystallised things for me. First, my dad died. I took a week off to be with the family, and on the day that I came back from the office, one of my team resigned. It was entirely the right thing for him to do and there was absolutely no ill will. But I just thought: we need to do something here. It was at that point that Linda and I decided that we needed to think seriously about our options.
We had a brilliant team but, at that stage, nobody who was obviously going to be our successor. So we started to think of possible merger opportunities. We had a very short list of firms that we would have been comfortable talking with, and Paradigm Norton was one of them. I had known Barry for over ten years. In fact, before Gareth retired, we’d had a conversation with Barry, and Barry had said at that point that he would be very interested in The Red House if we ever thought of selling it. So the conversation picked up quite naturally in about January 2017.
How did you find the process of combining your two firms? Was it harder than you thought it would be?
The Red House was the smaller party. We were a firm of about seven, and Paradigm Norton at the time would have been 45 or 50, something like that. What you typically expect in those circumstances is that the big brother comes in and smashes away the systems and processes of the smaller business and you just get on with it. But it wasn’t like that at all for us. It was a genuinely a matter of, “OK, how do you do x, y, and z? Can we find a best of both?”
So, for probably about the first 12 months, there was very little change at all as far as The Red House was concerned. We were trading as Paradigm Norton, but we were continuing to run on the same processes and systems as we always had. Gradually, over time, what we did was work to consistently merge the best of both practices to get to where we are as a business today. But I think that’s always a process of evolution. I don’t think any business ever has the perfect systems and processes.
I think, from a team perspective and a client’s perspective, people are naturally sceptical when there’s change. I was very clear about the reasons why I thought it was going to be beneficial for all parties. But of course, it takes a while to bring other people on that journey, and I’m absolutely delighted to say that, three-and-a-half years later, we haven’t lost any clients, or lost any team members other than one of our colleagues moving as a lifestyle choice to live in the Peak District. The London team has gone from strength to strength. The office has more than doubled over the three years and we see it very much as a growth centre for the business.
You won the Chartered Firm of the Year award in the PFS Awards last November. What do you think that was in recognition of?
I have to say I was very chuffed to win that award. I think it was in recognition of several years of hard work. Paradigm Norton was set up by Barry and, shortly after, William, in 2001; and they have grown that business to 70-plus people, which is no mean feat. It’s difficult to scale a business. During that time, there have been many iterations, and there’ve been some good acquisitions along the way, including The Red House. Combining our strengths has brought the business to where it is today.
It’s also in the last three years that we’ve become employee-owned, which I think is a really exciting base for the future. We’ve become a B Corp, which solidifies our values and beliefs about how business should be done, and how business can be a force for good. We’re just constantly looking to grow and develop the business.
We also do bloody good financial planning as well! We never forget what we’re here to do, which is to have a positive impact on our clients’ lives.
RECENTLY ON ADVISER 2.0
How to engage clients in the planning process
Advisers need to step up against misinformation
Young people need financial education more than ever
We’re at a tipping point in the history of the profession
The challenges facing the next generation of advisers
Creating a better future for the advice profession
VIDEO MARKETING FOR ADVISERS
Did you know that our partners at Regis Media provide a wide range of high-quality video content for financial advice and planning firms?
For firms in the UK, we can either come to you, or you can come to Regis Media’s studios in Birmingham, where we have a full white-screen set-up with lights and autocue. For firms outside the UK, we’re happy to talk through the options with you.
If it’s educational content you’re looking for, we have more than 200 pre-produced videos which can be tailored to include your branding, contact details and call-to-action.
Interested? Email Sam Willet, who will be happy to help you.
© Adviser 2.0 MMXXI