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Profile: how Matthew Butcher is carving a new role at Dart Capital

Profile: how Matthew Butcher is carving a new role at Dart Capital

The wealth management industry is undergoing a profound period of change: whether it wants to admit it or not.

Having taken nine months out of the profession, Matthew Butcher is not afraid to address some of the elephants in the room. Firms not acting in the best interests of their clients are one of his biggest bug bears.

‘There should be a minimum standard of behaviour in the industry. I still witness exit charges, which should be banned outright. Anyone charging these should be charged back with interest for imprisoning clients. There is no place for it,’ he says.

In contrast, what he saw as a client-centric approach attracted him to Dart Capital, where he has been working as a director since June. Two months in, he is clearly relishing the flexibility and opportunities to ‘get stuck in’ that tend to be associated with smaller businesses.

Discussing his decision to come back into the profession, he says: ‘The question was which smaller firm? I wanted one that was cash generative, profitable and fair to clients. Putting the client at the centre of what they are doing, even though commercially it may not benefit the firm.


‘That is the bigger test. What wealth management company writes to the client to reduce their fee because they think it is the right thing to do?

‘That is a brilliant thing to do. They [Dart] don’t focus on the bottom line of the business, they don’t have a sales target. They focus on looking after clients, which means the bottom line looks after itself. It is also an owner-managed business and that is a very noble trait.’

Butcher’s new role is broad in its nature. He is seeking to strengthen the firm’s presence in the adviser outsourcing market and will look to enhance Dart’s investment and decision-making processes.

Research – a subject close to Butcher’s heart, having spent nine years at the helm of Brewin Dolphin’s research department – represented another draw for him. He says Dart’s three-strong team shows the firm’s commitment to getting research and portfolio management right.

‘It is about incrementally improving what you do and not seeing research as an unfortunate cost,’ he adds.

Meanwhile, Dart Capital’s Cheapside offices present a weird irony for Butcher. He notes that being close to markets – physical markets, not just investment – is a trend that has so far run through his professional life.


Mercury Asset Management, where he started his career, was close to Borough market, Brewin Dolphin overlooked Smithfield and now he is a stone’s throw from Leadenhall. ‘The Butcher does not like to be far from the market,’ he jokes.

He moves on to another bug bear: trail commission. It will be banned on a legacy basis in 2016, but this is not soon enough in Butcher’s opinion. ‘It pains me to think that trail commission can be received until 2016. I am glad it is going but it would be nice to think it is already gone,’ he says.

‘Those that built business models on the receipt of trail commission are naturally less likely to want to see that go out of the business anytime soon unless they have completed some form of repricing elsewhere.’

He expects this repricing will come in the form of higher discretionary management fees and reduced central costs. Given how competitive the marketplace is, he expects this could make things all the more challenging for wealth management companies.

The adviser outsourcing market is another area where competition is rife.


Dart has historically not had a large presence in this area but, under Butcher’s leadership, the firm is set to launch a model portfolio service for intermediaries in September. It will partner with their administrator AJ Bell to power the project.

Butcher believes the opportunities to attract business from advisers is still huge following the retail distribution review. He will draw on his experience in the field, having been an early mover in this market after launching Brewin Dolphin’s Managed Funds Service in 2005.

The intention is to make sure the proposition is keenly priced by keeping the total expense ratio below 1%. This will be inclusive of underlying fund fees, management charges and the administration fee, with no transaction charges.

‘We will be able to leverage our existing intellectual property and research here. Our back office and custody relationship is incredibly strong and our portfolios have a solid five-year track record already.’

Over the past five years, the majority of growth in the business has come from direct private clients and referrals, Butcher says, but he believes the firm’s efficient operating model and clean structure should make it a prime partner for intermediaries. Dart has more than £250 million under management in total.


‘We will look at selective acquisition opportunities if the outcome for underlying clients is a positive one,’ he adds.

The managed portfolio service will replicate the models that lie at the heart of Dart’s existing proposition for direct clients, with Butcher noting ‘all the pieces are here’.

As geopolitical tensions simmer amid warnings that asset classes across the board are looking expensive, Butcher says protecting against downside risk is at the forefront of the investment team’s minds.

‘You have got to be pragmatic about it and look at alternative sources of protecting wealth, and you have got to be pragmatic about cash weightings,’ he says.

‘Traditionally, wealth managers have been very reluctant to hold high levels of cash because it is perceived as a difficult conversation to have with the client, but I think it is an easy conversation to have if you believe markets will sell off and equities and bonds will correlate in some way.

‘Preserving capital through cash and absolute return funds and a bit of commercial property is quite a sensible thing to do tactically or even strategically.’

As a result, the team has upped commercial property exposure and broadly decreased its equity allocation.


The firm’s balanced portfolio currently has 30% in UK equity, 30% in international equity, 20% in fixed income, 10% in alternatives and the remainder in cash and property.

Over the past five years the model has posted a 59.29% return.

When it comes to the active versus passive debate, Butcher is agnostic. ‘We prefer to spend our risk budget where we have real conviction in active management. We use a mixture of active and passive funds and have a preference for active management where we see they can really add value as a long-term holding. But the most important thing for us is to bring the client to the centre.’

Fitting with his concerns that parts of the industry have not historically acted in the best interests of clients, he hopes to see greater co-ordination within the sector in the future and says regulatory intervention is understandable given the ‘sins of the past’.

‘It would be lovely to think that you have a regulator with less work to do. Unfortunately, because of those past sins, you can’t leave that to chance. I really do welcome the new regulatory regime we are operating within and the new regulatory structure.


‘It would be nice if the industry was more proactive and a little less tribal in their dealings with one another and understand that every action it performs affects the retail investor in some way.’

On a more positive note, Butcher feels optimistic about the prospects for Dart and other smaller businesses in the sector. He argues that barriers to entry are not as high as many perceive them to be and expects to see a reversal of the consolidation trend, which has seen large firms absorb smaller rivals. He also points to auto-enrolment and Budget changes, which should prove supportive for the industry.

‘It is all to play for in wealth management. It is a very exciting time,’ he says. ‘If it is a question now of a relationship-based model or a Nutmeg model, for example, I don’t feel threatened in any way by the development of any of these models.

‘I think it is great for retail investors to have choice and we should support that whether it competes with us or not.’

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