If you were looking for a shrewd fund picker to boost the profile of the asset management division of a burgeoning law firm, Haig Bathgate fits the bill perfectly.
At the tender age of 32, he heads the firm’s investment strategy, taking charge of its fund picking and asset allocation as well as being the architect of its fund and manager screening process.
The glass and steel frontage of the building in which Turcan Connell houses its Edinburgh operation, a stone’s throw from Scottish Widows’ upturned spaceship, is as imposing as Bathgate is unassuming, but his value to the firm should not be underestimated.
He now sits in a team that oversees £450 million in discretionary assets and £150 million in custody, in a department that has 11 fund managers and five financial planners.
Bathgate’s worth to the firm is borne out by the fact that, with head of financial planning Bob Hair, he was made a principal at Turcan Connell last April.
The promotion makes Bathgate what he calls a ‘quasi-partner’, despite the fact he is not a lawyer so cannot technically be a partner at the firm.
It is a further indication of his value, however, that the firm is lobbying vigorously to get the law changed so that both Bathgate and Hair can become partners.
‘We are not lawyers so cannot technically be partners but as principals we are quasi -partners in effect, and are invited to attend most of the partner meetings,’ he says.
‘All the pointers are looking towards a change in the law within the next two years, which will be great news for our private clients.’
Bathgate has about 75 clients, running around £50 million in assets. As with a number of wealth managers, size of portfolio is not necessarily the most important aspect.
‘We don’t really look at size, we look at structure. If the father has £20 million and the grandchild has £10,000, clearly you will run that money too.’
Brought up in the Scottish borders and in Edinburgh, he took a degree in business studies at Heriot Watt, focusing on finance.
He took a summer job at what was then Dundas & Wilson (D&W) in 1997. At that time, D&W merged with Arthur Andersen and the D&W private client business was demerged to become what is now Turcan Connell.
Bathgate was planning to go back to do a masters in finance but was offered a job at Turcan Connell and completed it while there.
He recalls: ‘There was no investment business at the time but I knew I wanted to get into fund management.’
By the time Bathgate joined, the two senior partners, Douglas Connell and Robert Turcan, had already put all the demerger plans in place.
The pair’s ambitions struck a chord with the ambitious young Bathgate.
‘The pair were quite visionary. Their ethos was to have a multi-disciplinary private client model.
‘The firm wanted to build on its expertise in all the areas relevant to a private client.’
The concept of creating a full service family office came up two years ago when the Edinburgh law firm opened an office in the West End of London.
It already had big tax, compliance, property law and employment law partners and the model has now evolved to include investment.
The aim now, Bathgate says, is to join all the components together into what Bathgate calls a ‘flagship family office’ – in effect a one-stop shop offering a raft of bespoke services to private clients.
Bathgate believes the family office service works best for clients who have assets of £3 million to £5 million.
‘Tax and investment go hand in hand at the moment. We are experts in tax-efficient schemes and investments. We have a lawyer who specialises in structures and we are good on EIS and property schemes, which gives us a competitive advantage.’
He adds: ‘We are focusing on making all the services seamless but it also allows me to be very focused. I don’t have to worry about the tax or legal structures or wraps, I just select funds and do the asset allocation.’
Another reason Bathgate has stayed at the firm for the past 12 years is because he believes the firm has the distinct advantage of being truly independent.
‘On the financial planning side we are not tied to anyone while a lot of our competitors are and can be bound by rulings from the top. We are able to focus purely on private clients.’
As part of the service to clients, Bathgate is evidently proud of the fund and manager quantitative screening process he has built at the group.
The screen, which he says is becoming more sophisticated all the time, is clearly a labour of love. Bathgate started to build it in 2000.
‘It currently has 26 different screening criteria and we have recently hired a maths specialist to work on it,’ he says.
While he won’t be drawn on actual numbers, Bathgate says the firm has been attracting decent inflows through the last 12 to 18 months of volatility.
He draws analogies with those with deposit accounts at a bank. ‘Normally people don’t move their accounts but right now there is so much inertia that people are looking around and moving. We are finding it like that at the moment.’
He is also dismissive of a lack of due diligence at some of the traditional private banks that he believes is costing their clients money.
‘A number of traditional banks don’t make the difference between capital and income – in effect the difference between 18% and 50% tax.
‘Getting your returns from capital is a no-brainer and it helps having the legal guys close by.’
Bathgate exudes contentment with his work-life balance. Living in Edinburgh but making regular trips to the London office is the perfect combination, he says. ‘It gives me the best of both worlds.’
With Bathgate on a mission to continue to build the profile of Turcan Connell’s discretionary investment business, clients will be heartened to hear it.