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Brewin vs Charles Stanley: rival CEOs speak out

by Danielle Levy on Apr 11, 2014 at 10:55

‘We are almost witnessing an inflection point between an old style brokerage business and a modern, contemporary, professionally managed organisation and this is the fallout from it,’ he said.

He views Charles Stanley as a modern professional firm but feels some of the points raised in the defence, such as responding to the internal suitability review and the decision to focus on larger discretionary clients, are part and parcel of moving to a more profitable model.

The recruitment of teams to rivals and subsequent legal spats are nothing new in the industry, but what has proved most surprising is the decision to bring the dispute into the public domain via the courts. The exact motivations behind this are not yet known, as is often the case in litigation.

As well as feeling genuinely aggrieved on the merits of this specific case, Brewin Dolphin may view it as a warning to employees considering leaving, or to competitors looking to poach its staff.

‘These sorts of disputes are not unusual but court action is. It looks like Charles Stanley has decided to attempt to embarrass Brewin Dolphin by putting certain things in their defence,’ said Susan Hopcraft, a partner who specialises in dispute resolution at law firm Wright Hassall.

‘This is not unusual in litigation and no doubt Brewin Dolphin had its eyes open as to what happens when disputes become public in court proceedings.’

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5 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Apr 11, 2014 at 11:40

Eventually all firms will become "Wealth Managers" and then the FCA will say "there is no competition here, we must breakup this quasi monopoly which we have created and create something new, which we will call, er, Advisory Stockbrokers"................................

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Thomas Scrase

Apr 11, 2014 at 11:44

Nice to have the views of other CEOs. It would be better if one had the views of clients who are impacted. The corporate entity is desparate to regard the relationship with the client as their own. The reality isas much(maybe more) that the relationship is with an individual who the client come to trust..

I also believe that national groups do not accurately analyse the profitability of regional offices and are susceptible to attributing bloated head office costs to regional offices.

It would be better if the clients' interests were placed more highly before firms start litigating. But that is not the way of the world unfortunately.

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Apr 11, 2014 at 12:24

"We are almost witnessing an inflection point between an old style brokerage business and a modern, contemporary, professionally managed organisation"

Strange comment. I don't think many people in the City see this as Old v. New but perhaps Old v.Old. The new thinking & modelling surely is coming from Nutmeg, Strawberry and a host of others intent on unshackling this RDR driven monopoly. The debate about who owns a client is a perennial issue but in this instance if the executives of Hill Osborne who became Brewin men received a handsome price and incentives for their business then the case for Charles Stanley weakens considerably.

In my experience courts frequently get the outcome wrong but in this case it does look as though Brewin's have the higher ground. I can't say I'm particularly fond of any of these aggregators who appear to have created a wholesome FEE model which must be impacting on their clients somewhat.

Service, commission and investment merit sadly has been replaced by a new doctrine that encompasses fees, packaging, adverse risk, warped suitability and an apparatchik attitude. Markets and capitalism will be the loser if regulators and trade bodies don't wise up to this game soon.

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Apr 11, 2014 at 14:11

Competent, client-focussed, relatively low-cost businesses rarely have much in common with modern, contemporary, professionally managed organisations, pace McInroy & Wood.

That is because quiet competence, an obsessive focus on the clients interest rather than yours and the desire to keep fees down doesn't cover the shiny offices, the sponsorship, the expensive CEO and all the other overheads.

Small can be beautiful, and provided you have broad shoulders that can bear the not inconsiderable burden, it is possible to build and grow a very successful traditional business.

It may not be the sort of business with which todays regulator feels familiar, but it serves its clients better than the vast majority of its peers.

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Mark Smithers

Apr 11, 2014 at 16:48

It is most surprising to read Ashcourt Rowans statement bearing in mind their own actions in encouraging new employees to prey on the clients of the employees previous companies.

People in glass house should not throw stones.

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