Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Brewin's £32m hit exposes wealth firms' big tech headache

Brewin's £32m hit exposes wealth firms' big tech headache

Brewin Dolphin’s decision to take a £32 million hit and ditch a software upgrade underlines how wealth firms are grappling with technology in today's brave new world.

A lot of the older firms have been forced to upgrade their systems to cater for increasingly technology savvy clients and meet growing regulatory demands.

And with the FCA holding the ‘sword of Damocles’ over wealth firms on suitability, getting the right technology systems in place is critical.

Last month’s £18 million fine for Invesco Perpetual underlined how poor tech systems can prove costly. As it dished out the fine, the financial watchdog criticised the asset manager for having manual record keeping systems, which in turn created a risk daily valuation of some funds would be inaccurate.

Anthony Rawlins, a senior manager in the Financial Services Industry Group, said the Invesco Perpetual fine underlines how the FCA’s interpretations of ‘treating customers fairly’ has changed.

‘Their focus on best execution, systems and controls shows there can be no room for management complacency. Even newly developed systems may well be in breach of FCA rules, allowing companies to inadvertently fall foul of the new interpretations without knowing they are at risk,’ Rawlins said.  

‘The lesson to be learned here must be that executives should be constantly asking, on all activity, ‘Will the outcome have an adverse impact on our risks?’ and ‘What will the impact be on our customers?’

At such a cost, Brewin's decision to abort the new Figaro software across its wealth business would not have been taken lightly.

In a statement to the stockmarket, the group said it would instead look to upgrade its existing internal systems and stressed its IT strategy remains important.

‘The board believes the decision to cease the roll out of Figaro is in the best commercial interests of the group,’ Brewins explained. ‘Moreover, it remains confident that the 2016 operating margin target will be achieved through on-going business improvements,’ the company said in a statement.’

If Brewin can get its tech right the potential reward is significant.

A survey from SEI highlighted how improving operations remains a priority for investment managers as regulators continue to demand deeper levels of transparency.

It also highlighted how operational capabilities are becoming a key competitive advantage, with 77% of the investment managers surveyed believing there is a ‘somewhat strong’ or ‘very strong’ link between their operational capabilities and their business' competitiveness.

‘Having strong operational capabilities has been moving up on the priority list for investment managers for years now as they see that superior operations can actually differentiate their firms in the marketplace,’ SEI’s Ross Ellis said.

‘In today’s climate, it’s critical for investment managers to find new ways to enhance and streamline operations in order to support investor demands.’

As Brewin goes back to the drawing board, it will hope this time it comes up with a tech solution to exploit this opportunity.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play CEO Tapes: Buxton to Gilbert - ‘my Glencore quandary’

CEO Tapes: Buxton to Gilbert - ‘my Glencore quandary’

Do not miss the first two minutes of this film as Richard Buxton shares how he has been challenged by a client for owning shares in a certain company.

Play CEO Tapes: the huge opportunities for asset managers

CEO Tapes: the huge opportunities for asset managers

From tech disruption, retirement and poaching, the CEO discuss the opportunities for their businesses in this episode.

Play CEO Tapes: 'we're just a bunch of white dudes sitting here'

CEO Tapes: 'we're just a bunch of white dudes sitting here'

In our brand new series, eight CEOs discuss how the industry could do a better job for female fund managers.

Read More
Your Business: Cover Star Club

Profile: Kevin Doran's formula for success at AJ Bell

Profile: Kevin Doran's formula for success at AJ Bell

From a degree in theoretical physics to teaching and becoming one of the youngest chief investment officers in the UK, Kevin Doran has certainly had an interesting career.

Wealth Manager on Twitter