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How MDG-MK is building in growth and transitioning from father to son

Keith and Josh Butten have positioned their firm, MDG-MK, for steady highly profitable growth over the next few years as well as a controlled transition of the business from father to son, they tell ABR editor Rob Kingsbury

MDG-MK is a family led business, managed by Keith Butten and his son Josh, which has enjoyed four years of double-digit growth of between 15% and 29%, as a result of its development plan, which was kick started when Josh (now 24) joined the company in 2010.

“Josh coming on board first as a diploma qualified and now as both a chartered and certified financial planner has enabled us to take on more clients at the highest level. That would boost the bottom line of any business,” says Keith (pictured), who this year celebrates 30 years in financial advice.

“Also, it has taken the business in a different direction than it might have gone, because without Josh deciding to join the family business I would have been looking at an exit strategy. It has provided impetus for me to strengthen and grow the business with a very clear transition strategy in mind,” he adds.

“My responsibility now is to ensure Josh is ready so that if I said I was fully stepping away from the firm he could take over running the business without a blip in the transition. While I’m not looking to move away from the business for a number of years as yet, it’s important that we plan ahead.”

To that end, Josh explains, he has been involved in every decision around the future and running of the business from the time that he decided financial planning would be his career and he wanted that to be within the family firm.

“My responsibility is both to engage in the ongoing learning that I need to keep improving as a financial planner, as well as to pick up the knowledge and experiences that Keith has had, to which a typical 24-year-old will not have been exposed. In other words, to be a financial planner and business owner, which are two different things.”

Having a strong ethos for the business with full financial planning at its core, Keith says, means they have the same beliefs and commitment to the business. Part of this can be seen in the dedication they have to becoming as qualified as possible, which has seen the duo win national recognition from the CII and CISI for achievements in their qualifications – both have chartered and certified status and Josh was the country’s youngest diploma qualified and then the youngest Chartered and Certified Financial Planner, while Keith passed the Certified Financial Planner exam first time for which he received the CISI’s Jonathan Timms Memorial Prize.

“It also means that we tend to get to the same business decisions whether our thinking has been done individually or together – and that is because we are aiming at the same outcome,” adds Josh. (Keith talks more about the firm’s plans for growth in the accompanying video.)

Business support

Another fundamental reason for the firm’s success was Keith’s decision back in 2005 to focus on what he was good at, building long-term relationships with clients of the kind he wanted to deal with. He moved from running his 18-staff successful IFA firm to create a more bespoke business serving selected HNW clients, stripping down the business to 100 clients and four essential staff. He also moved it to a purpose-built office next to his home in rural Bedfordshire. It also meant finding an operational support provider.

“With a business of the size and focus I wanted to have, I knew what I had to find was someone else to take care of the operational elements, so that as a team, we were all working on clients and not distracted by those aspects of running the business,” he says.

“MDG deal with things like the IT, compliance, business submissions, negotiations with PI insurers, and provide the supporting infrastructure that a financial planning business like ours needs to be successful.”

However, while the firm now operates as the Milton Keynes (MK) arm of MDG, with Keith and Josh as associate directors of MDG, it effectively runs as a separate business. “It is fundamentally different to a network relationship; this is a coming together of liked-minded financial planners wanting to work together under a common brand but all running separate individual successful businesses,” Keith explains.

“It’s a business relationship that works very well for both parties and I think it does that because we are not tied to one another.”

Client policy

Keith adds that the firm is in the fortunate position that it can take on only the clients it wants. “We only work with people we like. We would rather have a discovery meeting and politely say no thank you than take on clients that our team can’t get on with. We don’t judge people by what wealth they’ve got but by how nice they are. It’s so important that as a small business we know our team members are dealing with great people and they are enjoying their work. Key to having happy clients is having happy staff.

He reiterates that they are not looking to grow the business at all costs – they won’t be going down the route of acquisition or buying of client banks – but rather sees the opportunities in organic growth, to further strengthen a long-term profitable business that not only serves its clients well but also its staff and the shareholders in the business. “Our team is very important to us and as we take on more advisers, paraplanners and administrators we will be looking for those who understand the benefits of having that strong ethos.” (See the accompanying video.)

The business is split between private clients (70%) and corporate clients (30%), with full financial planning at its core. Some staff work in the office while others work remotely.

“For our private clients it is about getting to know everything about them, digging deep – so proper lifestyle financial planning,” Keith says. “First meetings will usually be attended by both Josh and I. By the end of the meeting we will normally have concluded whether the client is best suited to Josh or myself. That is never down to the assets the client has, rather it is down to personality types and which of us is best suited to serve the particular client.

“For our corporate service – every single person in every company we service gets to see us once a year. It’s an incredible service level and the companies love it.”

Building for the future

A clear illustration of the firm’s commitment to the future can be seen in the decision to build a brand new, state-of-the-art office, with sufficient room for expansion, in close proximity to its current office location, in fact in the next field.

The build, which starts this year, will deliver an open-plan glass and brick structure, facing a man-made lake, with dedicated car parking for clients. (Keith talks more about the new build in the accompanying filmed interview.)

“The reasons for building the new office are three-fold,” Keith says. “First, a good proportion of our clients visit the office so it’s about the look, feel and the atmosphere it will create when they visit us for advice. Second, our staff are here eight hours a day, so we want to build a fantastic place for them to work. And thirdly, it will give us room to grow and expand the business, future-proofing it for Josh and everyone who works for us.”

This reflects the ethos of the business, he adds. “It’s all about the three parties that are important to us: the clients; the staff who are both crucial to us and mean a lot to us; and the shareholders in the business. Every business decision we make is focused on what’s right for all three parties.”

Transitioning the business

One way they have helped facilitate the transition from Keith to Josh as the business leader has been for Keith to take more holiday time, allowing Josh to take on more responsibility for running the business in a planned and gradual way.

“It means the whole team begins to work in a different way and gets used to the change,” Keith says.

“The definition of a successful business is not our knowledge of products and services and ISAs and trusts, it’s the experience of having worked with our clients over a long period of time, of working with successful people in their own right and travelling with them on their journeys, good and bad, and passing on that experience and knowledge in a way that benefits the business.

“And it’s not about setting percentage growth or AUM targets, it’s about growing the business in the right way. We’re very profitable as we sit today and we could keep the business as it is. But organic growth and a challenge in how we do it is important to us both. If you get your service proposition right the growth will come and profitability with it.”

MDG-MK fee and charging structure

See tomorrow’s article where Keith and Josh discuss MDG-MK’s fair fees and charging structure – what it is and how it benefits their clients and the firm.

 “For businesses that look at every bit of business as an individual transaction, what we do would make no sense at all.” – Keith Butten

Watch the videos

Our plans for growing the business

What our brand new office offers our staff and clients

The kind of people we want to join us

Visit the MDG-MK website

 

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