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View the article online at http://citywire.co.uk/wealth-manager/article/a745953

Brewin vs Charles Stanley: rival CEOs speak out

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

Brewin vs Charles Stanley: rival CEOs speak out

Brewin Dolphin’s decision to sue rival firm Charles Stanley has received qualified backing from wealth management CEOs.

While supporting Brewin’s decision to protect its franchise, the CEOs also question whether airing their dirty laundry in public could prove damaging for the broader industry.

Brewin is suing six former senior employees from the office, known as the ‘Leicester Six’, alleging they breached their contracts and conspired with Charles Stanley to cause losses to their business. Charles Stanley has denied the claims and said it will ‘vigorously resist’ them.

The Charles Stanley defence document, exclusively revealed by Wealth Manager last week, exposed a list of grievances. These typify the tensions that exist in most large wealth management firms as they seek to centralise and become more profitable.

The Leicester Six’s complaints centred on Brewin’s move to a unified rate card, the imposition of an internal suitability review,
the allocation of costs of the FSCS levy and a new strategy to drive profitability.

Richard Whitehead, chief executive of Dart Capital, identifies with Brewin’s decision to protect its business, but questions the fallout for the broader industry.

‘You have to be seen to protect your own interests. The people that have moved wanted to leave which is fine and they should be allowed to do so, but not at the risk of breaking the terms of their past employment. Why they wanted to move has meant they have aired their dirty laundry, which is not healthy for the industry,’ he said.

‘It would have been better if they had kept it out of the public eye. These things are better dealt with behind the scenes. It is a shame the personal aspect has been aired so much by the individuals. It doesn’t show anyone in a good light.’

Ashcourt Rowan chief Jonathan Polin (pictured) said: ‘It is totally understandable that companies have to protect themselves, as we would against any movement of that number of people, but it is unfortunate the way the news has come out. From Brewin Dolphin’s point of view, they want to absolutely let people know that they are not going to take this lying down and will follow through.’

One chief executive from a medium-sized wealth management business, who preferred to remain anonymous, said the dispute typifies Brewin Dolphin’s journey, like others, to become more efficient and profitable.

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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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CoeurDeLion87

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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PCIAM

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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