'I was nervous leaving my job to set up a business. You always have doubts'

RORY GILLEN STUCK with his idea for years, even though he could see it wasn’t working.

The 57-year-old had just left Merrion Capital, the company he spent 10 years helping to build, to try to get his own business up and running.

During his last few years at Merrion, Gillen had organised a few training seminars on the side for people who wanted to get up to speed with the basics of investing.

He had also started a newsletter that people could pay to subscribe to and in turn get access to his website offering insights and tips on where to place their money.

After a buyout at Merrion led to most of the original founders leaving, Gillen thought it was time to try his hand at making a real go of his side project.

“I’d done 10 years there, I’d done my bit. I was ready to leave Merrion and the buyout was the catalyst,” he tells Fora.

“It was about being willing to take a chance. I was looking for a subscriber base for the newsletter, but the audience was very low, lower than I’d thought.

He adds: “Lots of Irish people have online stockbroking accounts, but people tend to know very little about investing, even if they do have online accounts.

“It was lean, and I probably pursued it longer than I should have had. I wasn’t getting enough subscribers. It gave me the message that either the product was wrong or there was no market.”

Change of plan

Gillen decided to switch track. While he didn’t have a huge number of subscribers, many of the people who did read his newsletter had asked to meet for one-on-one investment advice sessions.

Rather than teach people how to invest their own money, Gillen now focuses on investing it for them.

While he still offers the same services he did before – the newsletter and seminars – he took other staff on board so that he could offer a wealth management service. The move proved to be similar to his work establishing Merrion in 1999.

While Merrion had a backer, he and the company’s six other co-founders all put a big chunk their own cash on the table to get the firm off the ground.

“(Setting up Merrion) was a nervous enough time for me. We had all come from the institutional side of the business, so there was a flow of work, but it takes a while to get profitable and you always have doubts until you get to break-even,” he says.

Gillen had to take a chance once again setting up the newly-named Gillenmarkets, however this time its success or failure rested entirely on him. While the early days proved to be a struggle, the company’s fortunes have improved.

“I was surprised that the market (for DIY investors) was more under-developed than you could believe,” he says.

“But subscribers did ask for one-on-one sessions. What started out as a trickle became a torrent. The fact that people were coming down to me looking for hand-holding showed that the market didn’t exist.”

Dublin-based Gillenmarkets now employs 10 people, who are mostly involved in the money-management side of the business.

Risk-reward

In regards to the money-management side of its business, the company only deals with clients who have assets of €200,000 and up: any less, and it’s not worth the time.

Clients are charged 1% of the value of their fund: so if Gillenmarkets is handling assets of €200,000, it charges €2,000 for the year.

“We couldn’t do all the initial meetings, which take hours, draw up documents and do everything needed for someone with €20,000 or €30,000,” he says.

“If you think of 1%, and the number of times that you have to meet with someone and all the work that we do (it’s not worth it).”

Rory Gillen

The company invests and manages a client’s money according to their wishes: if they’re comfortable taking risks, they might give Gillen and his team carte blanche to invest in various equities.

If they’re more risk-averse, Gillenmarkets would likely focus on putting the money into things like government bonds.

“We wouldn’t say what returns we can make our clients. We would tell them what the markets are priced for,” says Gillen.

“You could say that markets are priced to deliver a return of 5% per annum in five years, but what happens over the next two is a bit of a lottery.

“You have to try to get them to understand (our role). It’s about getting balance and expectations in place.”

While Gillenmarkets will only accept clients with a minimum of €200,000 to invest, there’s no upper limit on the sums they commit – and many clients tend to have more.

Global

The company invests all over the world, focusing on “anywhere where there is a case”, according to Gillen.

Nevertheless, there are a few other companies in Ireland offering similar services to Gillenmarkets, such as Key Capital and Appian Asset Management.

However, Gillen says that the number of independent boutique asset managers offering similar services is relatively small and in reality the company is competing with insurance brokers, private banks and the private client stockbroking companies.

“As a group, independent boutique asset managers like us are a very small part of the overall pie at the moment,” he says.

“As we don’t charge upfront commissions on the delivery of our services, we can rightly claim that our interests are fully aligned with our clients.

“In our view, private client stockbrokers charging commissions of individual transactions, and insurance brokers and the private banks generating upfront commissions from investment products makes them sellers, not advisers.”

While the company is loss-making, Gillen expects that to change soon. The company made a loss of about €100,000 in the year to the end of March 2016 to bring its accumulated losses to just under a quarter of a million euro.

“We’re still about 12-18 months from a breakeven point, but the trend is correct,” Gillen says.

“You’re putting the cost in as you go along: there’s a high cost for two or three years, and you get clients after that. You have to put money in to get clients.”

As it looks to reverse its losses and expand, Gillen expects the company to continue taking on more clients and to grow.

“We see no reason that we couldn’t be the number-one boutique intermediary in Ireland,” he says.

“Our goal is to break even and then to decide how to get our message out there. There’s no ceiling on our growth.”

Asked what his motivation is for growing the business he says: “I can’t think of anything else new I would rather do. This is the vehicle. The aim is to get profitable and then see how big we can grow.”

This article is part of our weekly series examining the nuts and bolts of businesses. If you would like to see your company featured please email news@fora.ie.