It has only been a few years since Nick Swales and his colleagues at UBS’s office in Newcastle-Upon-Tyne were recruited by Rathbones to open a franchise in the North East’s biggest city. While this was a hectic time, Swales – commissioned as head of the new office – looks back on it with a remarkable calm.
‘I had no fear we would not be successful,’ he explains to Wealth Manager in Rathbones’ Tyneside office. ‘Don’t get me wrong, when I launched the office I was excited and nervous in equal measure.
‘But we were just moving across town. I have seen many firms come to the region from outside the North East to set up shop and they have failed miserably. Everyone knows everyone here so you have to keep your nose clean.’
Swales, who studied at Newcastle University, has a deep appreciation for the region and does not hide his enthusiasm for the audience he works with.
A trustee of the Newcastle University Retirement Benefit Fund and the University’s Development Trust, he also chairs the Percy Hedley Foundation – a North East charity for disabled people. However, although the region hosts the usual suspects of wealth management, it does not stand out as a wealth hotspot.
Though Swales agrees with this to a degree, he argues this is relative and that he is excited about the possibilities the region holds for Rathbones. He tells Wealth Manager he jumped at the chance (in his words, at ‘the final stage’ of his career) to step forward and grow the business.
While admitting that the region does have its challenges for wealth managers, he says this does not diminish his ambitions.
‘It is a fact that this is the poorest region,’ he concedes. ‘More than half the region’s GDP comes from the public sector which is very difficult for wealth management to deal with. We have a smaller cake.
'However, going back to the 1880s, the region has had some of the greatest entrepreneurs in British history. Newcastle was incredibly wealthy in the mid-Victorian period. Unfortunately, the area came to depend on a few major industries that diminished in the 1980s.
‘Since then however, there has been a massive redevelopment in the area. We have [tech-led development project] Science City and the area is pioneering software and game development.
Sage started here in a garage and is now a major FTSE 100 player. People in the North East are very entrepreneurial and very loyal to the region. I believe the cake is getting bigger and we are well positioned to benefit and support these new clients.’
Since opening its doors in 2013, Rathbones’ office has grown under Swales’ stewardship. Starting from zero assets on day one, the Newcastle team now looks after just over £400 million of clients’ money (with plenty in the pipeline, according to the office head).
The team on Tyneside has doubled from seven to 14, and this has included the hire of investment director Andy Webb (a Brewin Dolphin veteran of some 20 years).
In terms of targets, Swales is regularly out meeting clients and prospects, but is glad to not have set targets hanging over his head. That said, his ambition has not been stifled and he feels the site can definitely become one of the firm’s billion pound branches.
‘I am not given a target at all, I don’t believe in them,’ he explains. ‘We have an ambition and I have a belief that we can hit £1 billion. I am absolutely convinced we can hit that. We have done £400 million in four and a half years, so I expect us to do well.’
Growing the office headcount is another priority of his, but he admits the challenge is to find the right skills and – just as importantly – the right culture.
He says: ‘The industry is changing from a private client view, to be much more financial planning focused. An insistence was that we could do both things and have a strong offering to third party financial planners.
‘We could also have some [advisers] based in the office. The trick there is not to frighten either side. A lot of new [investment] business has been gained through introductory planners that are external and internal. It is a fine balancing act.’
Though Rathbones acquired a team to set up its Newcastle office in the first place, Swales is wary about wholesale hires to take the branch forward. Ensuring complementary philosophies is key, and he admits he has had to turn away very qualified candidates for just this reason.
Keeping a small team harmonious is high up Swales’ priority list, and he still likes to muck in: ‘As front-line troops, we still have a good degree of influence in deciding what goes into portfolios and what doesn’t.
'I didn’t want to just be a relationship manager, so as well as running the office I get to be involved in day-to-day business and what is happening to my clients.’
Though Wealth Manager is talking to Swales about his time on Tyneside and his ambitions for clients in the region, it would be remiss to not ask about Rathbones’ recent non-merger with Smith & Williamson.
Both firms recently announced, after months of speculation and even more of boardroom talks, that they had decided not to follow through with a merger that would have created a multi-billion pound company.
This de-escalation contrasted with the wave of consolidation that has swept through the lower reaches of the industry.
Though Smith & Williamson does not have an office in the North East – and therefore there was never any risk of Swales’ team being combined with another – the merger could have brought about seismic change.
‘We absolutely trust the hierarchy of Rathbones to make the right decisions,’
‘As you would expect, the negotiations were carried out at very high levels. The troops are told what they need to know and what they need to know to do their job. What is clear is the CEO is happy to grow organically and inorganically when it suits the business.
‘Therefore, it would be no surprise if the business was in numerous talks. The reasons for that are self-evident. The various costs we have to focus on compliance means you need scale and there will be consolidation in the industry, as we have seen already. We have to be ahead of the game.’
While on the topic of behemoth game changers, how does Swales feel about Brexit? Though the North East has its own wealth, the region is potentially more vulnerable than the South East to economic shocks. The office head says scenarios like this allow true value-add wealth management services to rise to the top.
‘In the run up to the referendum Rathbones spent a lot of time ensuring portfolios were prepared as possible for either result,’ he says.
‘Newcastle city centre was the first to declare and that was a remain vote. However, it was by such a slim margin and I knew we were going out. And, sure enough, a lot of other areas of the North East voted to leave. That said, we look at the opportunities it presents and at how we can preserve and protect our clients’ capital.’