Stanhope Capital, Fleming Family & Partners, Odey, Iveagh and Lord North Street feature among the leading wealth management firms that are imploring the FSA to exclude independent asset managers from its remuneration code.
Formed by Stanhope chairman Daniel Pinto, the New City Initiative, a think-tank comprising almost 20 asset management firms, aims to bring about long-term reform of the financial services, arguing that regulation is not a panacea. Pinto has received support from well known names in the industry, with Crispin Odey, Lord Iveagh and Stonehage’s Giuseppe Ciucci all featuring on New City’s board.
Pinto said the think-tank is in talks with the FSA and is encouraging the regulator to exclude independent asset managers from the oncoming remuneration code. Proposals include 40% of bonuses being paid to wealth managers being deferred for three years or more, with at least half paid out in shares or contingent capital.
Pointing to the origin of the directive in Brussels, Pinto argues the bank-centric initiative should not be applied to UK asset managers, who did not contribute to the credit crisis.
He said: ‘It seems like proportionality should be used to exclude independent asset managers from the scope of the directives. The reason is that for Brussels, the world is about banks and on the Continent they do not have an independent asset management sector – at least nowhere near like London.’
He suggests that if asset managers end up falling under the scope of the remuneration code, they will be at a disadvantage to banks in terms of attracting new talent.
‘I think that what has come from Brussels is very counter-productive. Banks have solved the issue by saying “let’s increase the fixed portion of salaries”, but the problem is the large institutions can afford to do that, whereas the small firms can’t afford to double salaries,’ Pinto said.
Although the measures seek to align wealth managers with their companies, there is not enough focus on aligning managers with their clients, he argues, suggesting that managers should be encouraged to invest their bonuses in the funds they run or the funds they recommend.