Schroders is unlikely to become an ‘acquisition machine’ following its purchase of Cazenove, private client head Andrew Ross has said.
As mergers and acquisitions continue apace in the UK’s fragmented wealth management sector, Ross (pictured) said it is unlikely the newly enlarged Schroders-Cazenove business will become a major participant in this wave of activity.
‘This is a big merger. It is the biggest acquisition Schroders has made in its history. Putting two businesses together of this scale is time consuming and complex.
‘Schroders hasn’t suddenly become an acquisition machine by doing this. This was a very logical merger. There were a tiny amount of companies that either Schroders or Cazenove could conceivably have done this with and we have done it with each other,’ he commented.
Now that the integration of the two businesses is almost complete, he said organic growth is top of the agenda. While he recognises the challenges of growing a business that is already of a substantial size, he has been encouraged that new business flows have not slowed significantly during the time of the merger. He also points to Cazenove’s history of organic growth, with a 68% rise in wealth management assets between December 2006 and June 2013.
Ross noted Cazenove’s discretionary service for advisers has proved particularly popular over the past nine months, benefiting from Schroders’ large presence in the adviser market. The desk manages around £1.35 billion for advisers.
‘This has been a growth area for us and there has been almost no pause for breath. One of the interesting things to me about the transaction is that it provides the perfect excuse for someone not to do business with you. But that hasn’t happened,’ he said.
The enlarged private client business, which has taken on the Cazenove brand, currently runs £25 billion across the UK and Channel Islands. Ross believes it is uniquely positioned as it can leverage off the global resources of the Schroder group and then tailor this for private clients. ‘What the brand within a brand bit means for our clients is that there is a part of the organisation that is completely focused on private clients and charities,’ he added.
All staff are now on the same remuneration structure and an incoming rate card will be applied to new clients once the two businesses operate from the same platform in August, he said. Existing clients from the two sides will stay on their traditional charging structures for now, dependent on what comes out of the CRD IV regulation.Nevertheless, Ross noted the structures were very similar, just arrived at in different ways.
Under retail distribution review rules, the enlarged group is classified as ‘independent on a restricted basis’.