Tony Delaney, who racked up 11 county hurling medals with Toomevara club in north Tipperary as a young man, has taken his knack for spotting openings far beyond the pitch.
More than a decade after leaving a career with Bank of Ireland’s New Ireland life and pensions unit to set up SYS Financial, a firm targeting employers and private wealth clients, Delaney is seizing an opportunity to grow the business at its fastest rate yet.
In the past year, SYS has agreed deals to buy 11 smaller financial brokerages around the country, leaving it on track to increase its assets under advice from €400 million to about €1.1 billion by the end of 2025.
“Consolidation in the broker market is only starting to gain momentum,” Delaney says. “And we’ve become a go-to for brokers looking to find a partner in recent years.”
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The number of deals in the pipeline for SYS means the 54-year-old is now talking about having €4 billion to €5 billion of assets under advice by the end of the decade.
To get to the next level, however, SYS is considering taking on a financial investor.
Delaney told The Irish Times this week he was in talks with a number of parties and said the process was “at an advanced stage”.
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While he hasn’t ruled out handing over a majority equity stake, he’s clear that his team will continue to be in the driving seat.
“The new investors will have to buy into our culture and not interfere with how the business is run on a day-to-day basis,” he says.
“This industry is based on trust. When we are talking to firms considering selling to us, the big concern for people at the top of the firms is where their clients are going. They have to ask themselves, ‘Can I walk down the street of my town and look former clients in the eye?’.”
While the general insurance broking sector has been the subject of a flurry of mergers and acquisitions over the past decade, consolidation in the financial advisory space – below the likes of the country’s two largest banks’ private banking arms and their stockbroking units, Davy and Goodbody – is in its infancy.
And way behind the curve compared to the UK or US.
But there are a few early leaders – typically backed by private equity firms, even if recurring fees, beloved by such investors, are less of a feature in the financial advisory industry than in insurance broking.
These include UK-owned and private equity backed Howden Ireland, and Fairstone Ireland; the Irish unit of Aon’s NFP; and Irish family-owned companies such as LHK Group and Gallivan Financial.
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The market potential has also ballooned. Total net Irish household wealth has grown by 120 per cent to €1.25 trillion between the start of 2009, immediately after the financial crash, and the first quarter of this year, Central Bank of Ireland data shows.
The wealthiest 10 per cent are behind almost half of the total.
But it’s the expanding mass affluent, those with €100,000 to €1 million to invest, who are the prime focus of the most active consolidators.
Financial assets – which strip out money tied up in family homes – have almost doubled to €555 billion over the 16 years.
While about €253 billion was tied up in life insurance and pension entitlements at the start of this year, €212 billion was made up of deposits and currencies, the bank’s latest quarterly household wealth report said. Other investments account for the rest of the €555 billion.
Irish households had a record of almost €169 billion on deposit with domestic financial institutions at the end of August, a separate Central Bank report has said.
About 85 per cent of this money was in current or on-demand deposit accounts, earning average interest of just 0.13 per cent a year – and seeing its value being eroded by inflation.
Irish households have grown their wealth by an average of 8 per cent a year over the past 11 years, faster than any other country in Europe – yet they remain significantly underinvested in traditional financial investments, at only 5.5 per cent of total assets, said a report published earlier this year by Fordel, a high-net-worth wealth management firm led by former Davy director Stephen Felle.
Meanwhile, some €295 billion in wealth accumulated by “retired households” in the State is set to be transferred to family and others over the next couple of decades, Goodbody estimated in a report earlier this year.
The growing number of buyers of brokers in the market is tempting many owners of smaller firms as they deal with their own succession planning, rising cost of regulation and compliance, and technology, as well as fierce competition for good advisers, sector participants say.
Having taken a large share of the estimated €100 million-plus proceeds from the sale of Gallivan Murphy Insurance Brokers (GMIB) to US financial services group Assured Partners three years ago, the Gallivan family of Killarney, Co Kerry, are committing a chunk of the proceeds to playing a role in driving tie-ups in the financial brokerage sector.
The family’s majority-owned Gallivan Financial has completed four deals since 2023 and is preparing to announce two more in the coming weeks, said managing director Fergal Smith, who sees assets under advice reaching €1 billion by the year-end.
“Over the next three to five years there’s going to be a lot of movement in this space. We see the number of brokers declining from about 1,200 to 700-800 over that period. We have ambitious plans to grow to a national footprint,” Smith said.
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“We want to build scale and provide back office and other supports to the financial planners in firms we are acquiring. The beauty for the principals of firms we have acquired is that they now have the freedom to do what they really want to do: work with their clients, while we’ve taken away their main headaches.
“The big thing in our industry is that a lot of financial planners are of a certain age – without a succession plan for their business. Small operators are finding it hard to scale up and attract talent.
“If they join forces with a bigger business they can attract much more talent, who will be exposed to career progression and opportunities.”
Irish Life, the country’s largest life and pensions group, was one of the early players out with the cheque book.
In 2018, the group bought Invesco, the Republic’s largest independent corporate pensions and investments consultancy, and followed in quick succession by buying a number of other intermediaries, including Acumen & Trust, APT financial advice companies and Harvest Financial Services. Irish Life ultimately rolled these into a stand-alone wealth management business in 2023 called Unio.
Ian Brady, chief executive of Unio, which oversees more than €15 billion of assets, says that the almost €170 billion of deposits sitting idle in bank accounts – at a time when domestic inflation is running at close to 2 per cent – tells its own story.
“The Irish market is relatively underserved, with low levels of financial literacy,” he said. “While we’re fairly good on pensions in Ireland, there is a low level of investment adoption and there is still a ferocious amount of money on deposit.”
The hope in the sector is that Minister for Finance Paschal Donohoe will make good on a signal in his Budget 2026 speech that he would look at establishing a tax-efficient savings and investment accounts regime as part of a roadmap to be published early next year to encourage investment among individuals.
Donohoe said the roadmap to “simplify and adapt the tax framework” to encourage retail investment would take into account the European Commission’s recommendation last week that Governments establish savings and investment accounts regimes.
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Still, his move in the budget to reduce the tax rate on gains made by investment funds – including exchange-traded funds (ETFs) – from 41 per cent to 38 per cent, has been largely criticised by brokers. It fell short of a recommendation in a Department of Finance report last year that it be aligned with the 33 per cent capital gains tax rate that applies to direct investments from stocks to property.
Brady said the advisory market had homework to do, too.
“The Irish market is heavily based on upfront commissions on products that garner commissions,” he said. “There is a real opportunity to change the market from product-orientation to more service-orientation, working out a client’s financial goals and supporting that with extremely robust investment products solutions.”
The typical cost structure involves brokers securing 3.5 per cent to 5 per cent initial commissions from life and pension or investment firms for lump sums invested on behalf of clients, industry players say.
The client then pays a so-called trail commission of about 1 per cent a year, with the broker taking about a quarter of this and the rest going to the life firm.
The valuation of merger and acquisition deals varies widely, largely because of differences between firms in levels of income coming from recurring fees and commissions. In some cases, this can be as low as 20 per cent to 30 per cent, industry sources say. By contrast, recurring income usually accounts for 90 per cent of the general insurance broking business – which partly explains the wave of deals this industry has undergone in the past decade.
Recurring income is higher among UK financial brokers as an overhaul of the system a decade ago – called the retail distribution review – in effect banned commissions and replaced these with upfront fees for investment advice and follow-on annual fees for ongoing services.
Buyers of Irish brokers also have to look closely at whether – or to what extent – their targets have been involved in putting clients into unregulated productssuch as loan notes. Such investments often involve much higher commissions, but also carry higher risk for investors and firms’ reputations.
Ask investors who committed hundreds of millions of euros to unregulated loan notes in the likes of Dolphin Trust (or Germany Property Group as it was renamed), which collapsed in 2021 with €107 million owed to Irish investors; Tower Trade Finance (Ireland) and investment firm Blackbee, both of which imploded in 2023; renewable energy firm Solar21, which ran into trouble two years ago and remains in middle of restructuring; and wind farm developer Arena Capital, which succumbed to examinership in September.
“The majority of people’s financial goals can be met through a traditional wealth investment offering,” Brady said. “You can solve for a lot of outcomes without getting into the likes of unregulated high-risk loan notes – which are also typically layered with more complicated fee structures and attractive commissions for brokers.”
Still, many brokers argue that loan notes can have a place in a balanced investment portfolio as long as the underlying projects are subject to thorough due diligence, have sufficient security and are subject to appropriate governance.
Much of the housing being developed in recent years by medium-sized developers has been funded by loan notes – which rank behind bank loans but ahead of equity in terms of recovery if a project hits financial problems. Builders like loan notes because they can bridge a financing gap before banks will commit to funding on a development – without diluting their equity.
The Central Bank’s revised consumer protection code for financial firms, due to come take effect from March, places obligations on regulated firms offering unregulated products to ensure customers understand these are not regulated.
Firms must ensure branding does not contribute to the risk – or create a halo effect – of customers believing that an activity or product is regulated when it is not.
Meanwhile, Brady said that a lot of younger investors were looking beyond the traditional stock and equity markets and “are interested in more exotic investments like crypto and private market assets – such as private equity and private credit”.
Advisers would need to cater for this growing international trend, particularly in private market investments, while ensuring that products were aligned with clients’ life goals, he said.
Paul Merriman, CEO of the acquisitive financial planning group Fairstone Ireland, said principals of firms undergoing takeovers can step back from the heavy administrative workload and concentrate on delivering quality advice.
Merriman’s PAX Financial business, which was behind the Askpaul.ie mortgages-to-pensions advisory brand, was the original Irish target when UK-based Fairstone Group entered the market three years ago.
The group, backed by US private equity firm TA Associates, sealed its 12th strategic tie-up in the Republic of Ireland last week, buying Offaly-based ERA Financial, led by Aidan O’Neill.
Fairstone Ireland now has €2.5 billion of assets under advice. “I would personally like to see us get to €5 billion by 2027,” Merriman said. The total valuation of Fairstone Group deals in Ireland to date amounts to €65 million, including earnouts.
Davy, which has the largest domestic wealth management business in the Republic, with €25 billion under advice in its private clients division, was an opportunistic buyer in the sector in the decade or so that followed the financial crisis, with deals including Bloxham, UK-based Sarasin & Partners’s Irish business and Dankse Group’s wealth unit in Belfast.
The firm, which is focused more on high-net-worth (HNW) individuals with at least €1 million of investable assets, has taken a breather on the deals front since it was acquired by Bank of Ireland in 2022.
It has had plenty to manage, with assets rising by €8 billion since it was taken over amid strong inflows and migration of €2 billion of Bank of Ireland HNW clients’ assets.
However, Declan Hanley, head of Davy’s private clients business, said the firm was open to getting back on the acquisitions trail “if the right deals come along”.
“The number of people who need wealth management advice has increased measurably over the past decade,” Hanley said.
“But even though there has been a significant increase in HNW individuals, there is a rising tide element as well. It’s potentially more important for a medium earner to have financial planning than a very high earner.”
