Stepping away from the corporate world was a big step for David Pegler and Tim O’Connor when they founded Brighton Capital Management. But the pair are keen to bring what they have learnt from their City careers, which include spells at Cazenove, UBS and Brewin Dolphin, to their new boutique on the south coast.
‘When we work with professionals in institutions, that has an impact on standards we set,’ Pegler says.
‘We want to get best of both worlds. We want institutional standards, but we want to deliver on flexibility and trust, which some big firms struggle with.’
Until recently, Pegler headed Brewin Dolphin’s Brighton office, which was closed and merged into the company’s Reigate branch last October. He has set up the new business with former Barclays Wealth & Investment Management head of strategy and proposition O’Connor, alongside former Brewin directors Ewen Emmerson and Francis Jarman.
Though called Brighton Capital Management, the firm is currently located a five-minute train journey away from the city itself in the Sussex Business Innovation Centre on the University of Sussex campus.
However, this is a temporary home while the firm is in its infancy and the focus is very much on Brighton.
‘We think there are great opportunities here and we are very committed to Brighton,’ Pegler says.
‘You would be amazed at what you need to get started. That is why the Sussex Business Innovation centre worked so well for us. As well as hosting our premises, the centre helps promote the business. I thought it was going to be very graduate-led but there is a good breadth of businesses here.
‘We set out a strategy and wrote a business plan, and divided up work between us,’ O’Connor says about the launch. ‘We got organised really quickly. Something that has resonated through our careers is that we absolutely know what a good business looks like.’
Aside from the fact Brighton has a lot of wealthy clients and a growing number of entrepreneurs, the pair say the fact there has been a lot of turnover in wealth managers in the region presents further opportunities.
For example, Brewin Dolphin’s decision to pull out of Brighton, which followed UBS’s earlier withdrawal, means there is now a lack of local coverage for the city’s wealthier clients. O’Connor says the only real competitors left are higher end financial advisers.
Pegler says: ‘I think all clients want a long-term approach. It is one of the major problems in the industry that there have been so many changes. There has been a loss of trust.
‘[When a wealth manager leaves] it can really be an upheaval and our clients are telling us they want consistency. Obviously, you have to make sure you tick all the boxes in terms of performance and so forth, but clients desperately want someone to understand their total circumstances. This has gone beyond investment to everything else, there is so much impacting peoples’ finances.’
O’Connor believes this is where bigger firms with high staff turnover and multiple business channels can struggle to service their clients.
‘By being in a pure wealth business as a boutique we can walk the walk and say what we set out to do,’ he says.
‘Where bigger firms have sometimes struggled is they can have good infrastructure and present a strong brand, but they cannot always ensure there will be consistency of the people dealing with the clients. And in a people business like ours, that trust is long-term. That’s really what drives our conviction.’
When it came to launching the business, Pegler and O’Connor admit they were initially nervous about the hurdles they would have to overcome in the first days.
With the Sussex Business Innovation Centre providing a cost-efficient starting infrastructure, the team then bought in a white label tech solution and Pegler was pleasantly surprised about its quality.
‘It was one of the things that worried me most when we started,’ he says.
‘I said to Tim “how can we compete with the big boys in the technology space?” They are going to have the deepest pockets to buy the latest bits of kit.
‘After our first meeting with the tech providers, I was flabbergasted by the bits of kit I could buy that were four times better than the solution I was using back at my corporate desk.’
O’Connor says his background in working on complex trading and banking platforms enabled him to compile an informed shopping list when they went to market looking for a technology package.
Brighton Capital Management partnered with Raymond James for technology and compliance support. O’Connor says they chose them because of their experience in working with boutiques. O’Connor knows the company better than many, having been among Raymond James’s founding UK partners from launch in 2001.
Further tech rollouts are in the pipeline. ‘Our business needs to be virtual, because we are a small business,’ O’Connor says. ‘That is something you struggle to achieve with big businesses. We will be launching a web app for reporting late this year and this will be iPhone and Android compatible. Many big institutions are still years away from offering that,’ he adds.
They are keen for the firm to remain a boutique as it grows, preferring to focus on a smaller pool of clients. The team is targeting £300 million to £500 million of assets under management. Individual client portfolios typically range from £1 million to £10 million, but O’Connor says the company’s small size will allow them to service the sub-£1 million bracket of the market.
‘We could start from £250,000 and even lower for intermediaries,’ he adds. ‘The fact some of the larger shops can’t afford to service pots this size is an opportunity for us. Our cost base of service is very different and we are able to drive certain efficiencies through our technology and small labour force.’
Further down the line, the pair say they would like to potentially offer a charity foundation for their clients due to the fact quite a few have experience in the philanthropic sector. However, first they have to focus on working towards building ‘critical mass’. Once this has been reached, Pegler says it will give them the freedom to look at broadening the proposition.
‘[A charity foundation] is something we value personally,’ Pegler says. ‘When the time is right it would be nice to expand into this and to give something back.’