First it was a York branch. Then a Nottingham office opened soon after. The latest Hargreave Hale office set up shop in Norwich, making it the third regional branch to be launched in just over a year.
As a result, Hargreave Hale’s regional footprint has increased by a few sizes. Focussing in on wealth management in the Midlands, we spoke to Riccardo Landucci, branch manager of Hargreave Hale’s Nottingham office.
It was reported by Citywire Wealth Manager on 5 July this year that Canaccord Genuity Wealth Management announced a deal to acquire Hargreave Hale for £79.5 million. At this point, the deal has been agreed but we are yet to discover how it will play out.
Landucci told me that it is an exciting step in the branch’s journey: ‘We are very excited about Canaccord Genuity Wealth Management buying Hargreave Hale; it will be positive for us and our clients.’
A Londoner born and bred, Landucci relocated to the Midlands after a stint in the City and worked in the Charles Stanley Nottingham office for more than 15 years. Then in April 2015, alongside previous Charles Stanley colleagues Helen English and Michael Harvey, opened the doors of Hargreave Hale in the city.
In the two and half years since opening, the branch has amassed £65 million in assets and there are five on the team; three investment managers and two support staff.
Landucci would like the office to continue on its stable, gradual trajectory.
‘I’m happy for us to grow steadily, which is better than prolific growth in the first two to three years.’
He takes the same approach when it comes to investing clients assets. They are not trying to shoot the lights out and invest in a way that is unsustainable.
‘The demographic of clients in Nottingham tends to be that they don’t want silly promises made to them that go terribly wrong when the market falls. They are more concerned about wealth preservation,’ he said.
Average portfolio size of their clients ranges between £200,000 and £250,000. When I asked Landucci how many clients they had, he was flummoxed but his reasoning for not knowing the figure off the cuff is a simple one.
‘We don’t look at clients as numbers,’ he justified. ‘Clients are our bread and butter. When the phone rings and the number comes up, we already know who it is before we’ve answered the call,’ he described, before continuing. ‘And if we don’t recognise the number, we’ll know them by the tone of their voice.’
Having worked with some clients for most of his career in the region, Landucci has built long term relationships.
‘One longstanding client told me recently that they felt like they had become part of our story. Hearing it like that made me realise that’s what I want clients to feel,’ he recounted.
In a region where the dominant hub is Birmingham, how does Hargreave Hale in Nottingham, and more broadly wealth management in the city, maintain its clients?
‘People are largely locally biased, in a good way. Those near Nottingham will turn to Nottingham for their financial needs, Leicester to Leicester and so on. The area we cover does however span Leicestershire, Derbyshire and Lincolnshire,’ Landucci described. ‘Nottingham is a bit too far away from Birmingham for it to be a real challenger.’
Due to its historical geography, and being supported locally Nottingham does not need to compete with larger cities and wealth management hubs.
The branch manager explained: ‘Leicester and Nottingham are historically manufacturing cities. They didn’t have the same merchant trade as cities like London, Manchester, Liverpool or Glasgow which are now substantial financial centres.’
The Midlands does however boast a thriving IFA sector, which helps the industry in the region become somewhat self-sufficient. Hargreave Hale’s Nottingham team works with a lot of IFAs, both larger networks and smaller individually run operations. Landucci also highlighted how the IFA sector has seen recent consolidation, although less so in the Midlands.
So whilst the branch doesn’t face much competition from neighbouring cities, how does it set itself above other wealth management firms in Nottingham?
‘What we are all about is providing the best service we possibly can, and I know everyone says that’, Landucci admitted. ‘We all compete on performance, price and service. With performance, it is hard to judge where you’ll be in a year’s time. Around price, we are not looking to be the cheapest on the market. We want to be value for money, providing the best service we can and charging a price that reflects that.’
The manner in which private client investment managers operate now, particularly on competing around cost and value for money, looks very different to how it was 20 years ago. In more recent years we’ve see further changes.
‘The pattern in the last few years has been to offer off-the-peg model portfolios,’ Landucci told me. ‘The relationship between investment managers and clients has changed in response. It’s not as easy now to give ad-hoc advice in the same way we once did and as a result more clients have moved towards a discretionary service.’
He continued: ‘Off-the-peg model portfolios have been the answer for some firms, but we are committed to the individual approach.’
An evolving industry has also brought a swathe of new regulation and more rules to adhere to. One outcome of this is how clients with smaller pots of money are being served.
‘Smaller clients are being marginalised and minimum investment prices are gearing up. We’ll reach a point where is does not make economic sense to serve these small clients in the current way we operate,’ Landucci explained.
Being based outside of London further augments this challenge, given the spread of wealth across the UK.
‘This is more difficult to manage in the regions because of the attachment to house prices. For the same money you use to buy a house in London, you can get a mansion in the Midlands. The intrinsic wealth in London rises much quicker than that in the regions,’ he pointed out.
Discretionary fund managers, not only in the Midlands, but everywhere outside of the capital will be affected.
‘This filters through, hence there tends to be more smaller clients in the regions. This puts us in a position of having to take on the new rules and regulation on costing while also still taking on these smaller clients,’ he continued. ‘The increased minimum fees are a larger percentage of their investment, resulting in a disproportionate cost. It is a real challenge going forward.’