Fresh from the integration of Eden Financial’s wealth business, chief executive of Canaccord Genuity Wealth Management (CGWM) Neil Darke says the company remains on the acquisition trail.
This forms part of a three-pronged strategy, along with pursuing organic growth and hiring in new investment teams.
CGWM snapped up Eden’s wealth arm last September, placing it under the Canaccord Wealth umbrella in May, with similar acquisitions a possibility.
Darke (pictured) told Wealth Manager: ‘Although we have a good regional client base, in due course we may look at a regional presence in the UK, but we won’t mimic [firms] who have 20 or 30 offices.’
New teams could be brought in to increase the company’s ‘visibility’, although Darke ruled out opening new offices, describing a large regional physical presence as ‘inflexible’ and expensive to run.
He stressed organic growth should come first: ‘To leverage the existing client base, we are focusing on organic growth through hires on the private client and planning side.’
The chief executive said further hires would only come once CGWM’s ‘multi-million pound’ back office infrastructure investment programme is completed in 2014.
‘On the back of the metamorphosis over the past five years, which saw our firm double its assets over the period, the back office picked up the burden of a larger business [as at 30 June, CGWM had £10.1 billion under management],’ Darke said.
‘CGWM has been rewiring its back office with a private bank system to further scale the business by lowering ongoing operational costs.’
The system will enable CGWM to better integrate all its divisions and cover multiple jurisdictions.
Darke also pointed to a major focus on financial planning, which he said regulatory pressures and suitability issues are forcing wealth managers to consider.
Although only 8.6% of the firm’s client base is currently using the full spectrum of the managers’ services including financial planning, advisory and investment management, they generate 22.7% of its total revenues, Darke said.
‘This is not the percentage of revenues coming from financial planning, but rather the total revenues from clients who receive financial planning,’ he said.
‘To deal with clients properly, you now need to offer all three disciplines [financial planning, advisory and investment management].
He anticipates the demand for financial planning will ‘increase substantially’, adding: ‘It’s inevitable.’
Additionally, CGWM, which has an extended offshore network in the Channel Islands and Switzerland, is looking to seize opportunities in both overseas and the non-domiciled markets.
Stephen Massey, Eden’s founder who was appointed head of UK wealth management at CGWM in July, told Wealth Manager.
‘Supported by our global 360° service [which offers financial planning services to clients with a total net worth in excess of £1 million], we are looking to attract non-domiciled clients, as well as clients from the Middle East-especially Israel, and South Africa, the rest of Europe, and the US,’ he said.
‘We are getting more international business,’ he added. ‘The flavour is changing’.
Massey also hinted at international hires, while continuing to use London as its financial hub, ruling out opening further international offices.
The acquisition of Eden helped drive a 38% surge in revenues to £27 million (£16.36 million) for CGWM in the first quarter, with assets under management in the UK and Europe rising by 22% to $16.1 billion (£9.75 billion).
The £12.8 million acquisition of Eden Wealth follows on from its £253.3 million purchase of Collins Stewart in December 2011. The firm was rebranded under the Cannaccord banner the following May.