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Wealth Adviser: Alec Stewart of Anderson Strathern brings 18th century service into the 21st century

Wealth Adviser: Alec Stewart of Anderson Strathern brings 18th century service into the 21st century

Like many venerable English institutions, the private client industry’s roots lie in the 17th and 18th centuries, as land enclosures revolutionised the ways in which agriculture was managed by creating private estates which, in turn, created a specialist cottage industry of bankers and lawyers. 

Land reform came somewhat later to Scotland. Edinburgh private client law firm Anderson Strathern is a relative stripling compared with some of the oldest names of British finance, at little more than 200 years old.  

Founded by several landed families – some of whose names remain on the client books today – and their lawyers amid the extraordinary explosion of wealth in the country in the early 1800s, the company has over the course of its history become synonymous with the Scottish gentry it serves.     

This has, of course, included changing alongside them. Alec Stewart, partner, head of investment and lead financial adviser at the firm, is more likely to advise on the tax efficient alternative power projects that are a major source of regional revenue than on the sheep contracts of years past.

‘Anderson Strathern always was primarily private client, and primarily rural,’ says Stewart. ‘Private client is still the biggest area of our work that we are known for, albeit now we also have a very strong reputation in corporate law.’

While it has always been a full service law firm, it has updated its reputation by bolstering its corporate team, and successfully managed to shed the fustier aspects of its image while bringing with it the values that have ensured its longevity.   


Following a recent recruitment drive, Anderson Strathern now employs 48 partners and around 300 staff spread across Edinburgh, Glasgow, Aberdeen, Haddington and Currie. The private client team is based in the Scottish capital and employs seven investment managers, three qualified financial planners including Stewart, who is authorised as both, and a paraplanner, serving 475 clients with a total of £205 million in assets under management.

The division generates £1.25 million in annual income, with a gross profit margin of 65%. Around 50% of income is recurring on annual fees of 0.75% below £750,000 and a sliding scale above this down to 0.35%. One-off financial planning projects are time-costed and charged separately. Asset growth stood at 12% last year, with similar expansion expected in 2011.      

The next step in the company’s growth will be the spin-off of the private client team into an independent, separately authorised and regulated entity, Anderson Strathern Asset Management, later this year. While the equity will remain with the partners for the foreseeable future, Stewart said this restructure will allow the planning and investment staff to assume directorships.

He points out that having all three skills under one roof has something of a multiplier effect.

‘[For instance] we had a client referred to us from the litigation department, whom they had represented in a compensation case for mental incapacity of a child.

‘We set up trusts for the compensation money and advised on tax, bought land on which we will build a property and, once built, we will also provide insurance. It is where I am wearing my private client hat as well as my lawyer hat – setting up tax efficient structures as well as managing money.’


Venture capital trusts, enterprise investment schemes (EIS), business property relief and tax efficient joint ventures are all widely used across client portfolios. Scottish estate owners capitalising on land that now has less competitive yield for agriculture have turned to the local renewable energy boom and its dual tax and revenue opportunities with particular enthusiasm, he says.

‘For example, one joint venture that we are currently working on involves a London-based corporate finance firm. We propose to create a structure that invests in a small-scale energy business, which is expected to qualify for EIS reliefs.

‘It will raise capital to finance, construct and operate small-scale wood biomass installations providing heat to buildings in Scotland owned by the private and public sectors, and in the farming and estates sectors.

The strength of the full service culture – which was lost by many traditionally private client law firms in London in the 1980s when they saw their future as being solely in whizzy corporate finance – is one of the things that has helped local firms retain a loyal following among clients on both sides of the border, as English competitors have tried to crack Scotland.

‘[Edinburgh] is now getting to be a very full marketplace – lots of people have arrived [in recent years] and set up offices of varying size. Some are just a room with a fax machine, others are extremely substantial setups, but I am certainly not aware that we have lost any business to them.

‘But it is certainly getting to be a very busy place – you do get the sense that there are a lot of stockbrokers running around town trying to do business.’ The appeal of the company’s offering is not limited to Scotland, with significant numbers of clients throughout the Home Counties and Oxford/Cambridge technology hotspots.


While investment principles and practice remain his core interest, he says tax requirements have made it increasingly hard to consider it in isolation. ‘The best approach is to get the structure right and then get the investment inside it right. We are very good at getting the structures right.’

Investment performance has also delivered, however, with the median growth portfolio returning 12.89% over three years versus the FTSE 100 return of -8.63%, although all portfolios are bespoke and with the widespread use of tax structures, individual client portfolio returns vary widely.

In keeping with the company’s old-school heritage, portfolios are a mix of collectivised and direct exposure. ‘In general terms [the last three years] have been interesting. In 2007 we undoubtedly made a very good call, offloading all property apart from where we had limited liquidity in tax structures. We got out of all Reits, and we clearly called that right.

‘There were two other principal moves, into fixed income foreign stock, German bunds and US treasuries, and UK corporate, both investment grade and junk, and into tech stocks. IBM and Google clearly had large cash surpluses.

Recent asset recycling has moved portfolios into agricultural exposure, particularly into the First State Agribusiness fund, and into equities such as machinery manufacturer John Deere, as well as UK-based fertiliser manufacturers.  ‘One of the big problems is that so much is farm-based – it’s very hard to buy the asset through equity,’ he says.  

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