Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a753874

Can listed wealth firms overcome short-term pressures?

by Danielle Levy on Jun 04, 2014 at 11:22

Can listed wealth firms overcome short-term pressures?

Wealth management is a sector undergoing profound change and sadly for listed wealth firms, this is a reality that is difficult to hide from.

Board reshuffles, technology U-turns, profit warnings and turnaround attempts across the industry have all been publicly broadcast to the market over the past few years by the listed names.

This has caused some to question whether it is a good idea that companies responsible for consumers’ long-term savings and investments should be subjected to the short-term pressures of the market and shareholders.

Daniel Pinto (pictured), Stanhope chief executive and founder of think tank New City Initiative, takes this view. He has grave concerns that CEOs of listed companies are too prejudiced by quarterly results and short-term incentivisation.

Detached leaders

He points out that some management teams of listed firms do not invest a significant proportion of their net wealth in their businesses, which means an alignment of interest is largely absent. In his view, this has contributed to declining capital expenditure, which is damaging for the real economy.

‘CEOs are no longer the captains of industry that created the industrial empires we know today.
They used to be owner-managers but today most of the CEOs are not substantial shareholders in their business,’ he said.

‘They are professionals who are incentivised by shares, but rarely invest a portion of their net wealth in the company they lead. At the level of the entire system, if you have all of these large corporations no longer managed by entrepreneurs but by administrators-in-chief you lose your urge or capacity to look to the future.’

His criticisms are not shared by others, however. Nick Hungerford, founder of Nutmeg, says listed wealth management companies do not necessarily have to bow down to short-term pressures.

10-year horizons

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Sponsored Video: Barings on investing in Frontier Markets


From Nigeria to Pakistan and from Kenya to Kuwait, frontier markets are catching investors' attention as never before.

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet