In the Spotlight with Matt Cottle

Matt is the former CEO at one of the country’s largest brokerages. Last year, he stepped back from specialist finance after 20 years to concentrate on family matters.

Rozi Jones
26th November 2021
Matt Cottle
"Technology is the great divider of firms and the ones who invest heavily will stand out and create value, not just cashflow."

FR: You surprised the industry when you exited last year after 20 years. What have you been doing since?

I’d given my all to Y3S and the industry over a 20-year period. Then we were in Portugal between lockdowns two and three. I woke up one morning and said to my wife, “That’s it – no more work. I’m going to spend all my time with you and the girls.” She was surprised but fully supportive of my decision. She knows I would have considered it for a long time first. One of our girls is quadriplegic and terminally ill. I was working out of choice rather than necessity and I’d achieved everything within my ability. I thought, hang on, there’s a choice here; either continue another 10 years and the stress of heading up a large brokerage, or watch my kids grow up. The pandemic and the lockdowns, bless them, had removed my fear of not being in the boardroom or on the shop floor.

These days virtually all my time is spent with my family – its chaotic. The care regime for a severely disabled child is 24/7, plus there’s two younger ones. A few hours a week is dedicated to building and maintaining our property portfolio. It is mostly phone calls and a bit of paperwork. We buy, refurbish and rent properties around Cardiff. Its something we’ve worked on for 20 years and it’s a good business. Doing something you love isn’t like work. Anytime left over is spent cycling, running and in the gym, where I get chance to catch up with my Y3S colleagues, people I’ve known and respected for a generation.

FR: South Wales has historically had a very active specialist broker market. What does it look like today?

It’s pretty unique in the way it has mushroomed since the early 2000s when Barney and I launched Y3S. Actually, most of the activity takes place within a 10-mile radius of Cardiff, which creates a highly-charged and extremely competitive staff environment. The Welsh are an industrious bunch, very entrepreneurial-spirited. Everybody looks at what the successful people have achieved and says, “I can do that”, and off they go and try to replicate it. Of course, it is not that easy to do, and as a result there are a lot of small brokerages. There are some good established firms with excellent people, but there are also some cowboy outfits.

Looking out there now though, the brokerages are mostly carbon copies offering the same thing. 90% are spin-offs of Y3S. I can only see one potential major brokerage emerging in South Wales. Competition for labour is so intense that wages are by far the biggest outgoing. Average advisers are getting signing-on bonuses and big basics for turning up and not doing very much. Some have worked at all the firms in the area. They can up stick and walk around the corner for another £5,000 or £10,000 on their basic salary and work a four-day week. The newest format is to go self-employed and take 75% of the prize, which isn’t a bad thing. In specialist finance though, that doesn’t leave much for the business that’s carrying the regulation can, especially as time goes on and monthly expenses start to mushroom.

The local market is so money-driven today, firms have little wriggle room for innovation. That’s the effect that time has on an industry where lots of fish are competing for space in a small pond. In a few years there will be owners that decide it’s just not worth the hassle.

FR: Will you be returning to the industry at any point?

I have no plans right now, but never say never. If I did, it would be as an investor or to provide growth capital and direction for an established business. I do get asked, and a few business plans have landed on my desk. But creating more of the same makes no sense. I think if someone came up with the right combination of capital, technology and branding there will be room for a well-capitalised, winner-takes-all business in the future. Scale will be the key.

FR: What challenges and opportunities will there be for brokers in the next 12 months?

If we’re still talking about the industry in South Wales, the challenge will be survival of the fittest. More brokerages spawn more brokerages, and competition for staff further intensifies, increasing costs. There will be winners and losers. In a downturn, those that have retained the most cash and staff without compromising quality will survive.

Opportunities in specialist finance are endless, but you cannot be all things to all people. You need to be well-known for two or three key areas. Second charges are growing again, albeit it’s still very niche. Bridging continues to exceed everyone’s expectations, but every man and his dog is a bridging broker. Equity release is a growing market and is currently underserved in South Wales. Technology is the great divider of firms and the ones who invest heavily will stand out and create value, not just cashflow.

FR: If you could see one headline about financial services/the mortgage market in 2022, what would it be?

I’d like to read that the regulator is getting serious about the cowboy firms that fly under the radar, have no regard for compliance procedures, give bad advice and overcharge customers. The regulator, limited by resources, concentrates on bigger firms, but sometimes they need to go deeper. Lenders are the first line of defence. ‘Know your broker’ should be as important as ‘know your customer’ - a bad broker can do a lot more reputational damage than one bad customer.

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