As the march of industry change accelerates toward the retail distribution review (RDR), the market seems divided between those willing to try out new ventures, and those preferring the safety of a well-trodden path.
Walker Crips’ recently installed chief investment officer Mark Rushton is firmly in the former camp. Joining earlier this year after a stint as head of offering at BNP Paribas Wealth Management, Rushton plans to take Walker Crips from a successful but comfortable position as a mid-size listed stockbroker and asset manager to a leading role, exploring the possibilities of the post-RDR world.
Less than a year into the job, change is well and truly under way at Walker Crips and alongside chief executive Rodney Fitzgerald, Rushton has been instrumental in a number of significant, modernising developments.
‘The nature of the business needed to move on,’ he explains. ‘I was hired very much to kick that off.’
Growing the company’s relationships with independent financial advisers (IFAs) is the first thing on the cards.
A model portfolio range, which is ‘very much geared towards IFAs’ will launch imminently, while its bespoke discretionary service will be opened up to the market with a new, lower cost charging structure.
Unusually in a commoditised market, Rushton has aimed to make the portfolios extra-customisable, with the service containing up to 20 models instead of the more usual four or five-strong range.
The Actively Managed Portfolio Service is expected to be distributed on platforms, consisting of five risk levels of defensive, cautious, intermediate, progressive and adventurous, each with an income and growth version, alongside a collectives-only or combination of collectives and direct equities option.
The bespoke offer will feature a revamped ‘clean’ pricing structure of 1% annually plus VAT, with a minimum investment level of £100,000.
The minimum investment for the model portfolio service has been set at £25,000, while the annual management fee has been set slightly lower at 0.8% plus VAT.
The move will also help boost Walker Crips’ recurring income, which currently stands at 33%.
But bucking an industry trend that has seen large investment managers move assets from advisory into discretionary, Rushton says he is happy to continue adding resources to grow the advisory side.
‘At a time when many businesses are foregoing anything but discretionary because it’s easier to do, if a client wants advisory, we are happy to do it,’ he said.
‘Of course, it is nice to have the comfort of a discretionary business… but we’re never going to exclude the advisory opportunity.
‘I think the thing about advisory, which is often forgotten is that it keeps everyone very sharp. If you come in to work expecting to talk about many different stocks, that’s going to keep you sharp throughout the day. I think that raises a level of capability that you just don’t get if you are a relationship manager within what is essentially a centralised discretionary service.’
This attitude is reflected in Walker Crips’ recent deal with Ashcourt Rowan for the transfer of six investment managers from Ashcourt subsidiary Savoy Investment Management.
The agreement, which Rushton describes as ‘ideal’, is targeting an initial £200 million in additional assets under management, split roughly 50/50 between advisory and discretionary.
The move is something which he maintains will help Walker Crips ‘get ahead of ourselves with our immediate expansion plans’.
‘It was an opportunity that presented itself and on the back of some very swift, positive talks with the individuals and Ashcourt Rowan the solution was a very good one for all concerned.’
Rushton says the business is still on the lookout for new joiners and is open to potential acquisitions.
‘We want to expand by buying those that bring assets that generate fees and revenue. We are also happy to look for pure asset gatherers.’
These measures should help boost the headline financial results, which in June showed a 56% decline in pre-tax profits to £769,000 over the past year.
Profits were affected chiefly by the loss of a key revenue stream – Walker Crips Asset Management (WCAM), home of well-regarded fund management duo Jan Luthman and Steve Bailey, as the business was sold off to Liontrust in April.
With markets tough and investors cautious, transaction volumes fell in the investment management division, although revenue was up 2% in the wealth and pension management division.
‘What does the WCAM sale mean in practical terms? It’s a profit centre that we no longer have. Having said that it was a very good deal for us,’ he said, adding that Walker Crips’ cash resources have tripled as a result of the sale.
Alongside the explicit ramping up of the firm’s service offering, Rushton has also been keen to work on something more subtle; Walker Crips’ branding.
He was behind the hiring of a new marketing and PR manager, and has overseen the creation of a more sophisticated, eye-catching black and green logo.
The website, too, has been relaunched – replacing a previously rather sparse and unedifying version. ‘It’s now time to put our head above the parapet and go to the outside world,’ he said.
He is especially proud of the company’s back office, which he describes as ‘phenomenal’ and says he is keen to sustain the quality of it.
These systems will have no doubt played a part in Walker Crips’ reputation as a clean business, unscathed by an avalanche of scandal that has overtaken the industry in recent years.
Rushton initially trained in law at Cambridge but soon decided that the ‘cloistered world’ was not for him.
‘I wasn’t going to be a lawyer. I think I looked at the life and the freedoms of a solicitor and wasn’t too happy with that as my future. I think the bar looked as though it was going to be a little bit of a cloistered journey through Radley, through Cambridge and to the bar and I wasn’t entirely happy with that.’
Instead his eye was caught by the more ‘meritocratic’ world of investment banking – the path from law to banking had not yet become so widely recognised – and he took a job with one of the Japanese banking giants rapidly expanding through the world in the 1980s.
‘I wanted some real world experience. The great thing about going into the meritocratic world of investment banking is that you can be working alongside an Italian count and an American petrol boss and no one gives a damn where you come from, it’s how good you are and what you do.’
Climbing the ranks via roles at UBS, Cazenove Capital and Fortis (later BNP Paribas), Rushton developed specialisms in equity derivatives and later, structured products before moving onto a job on the buy-side at Cazenove.
Rushton seems to have found a home at Walker Crips and talks of the business with a tone of fondness rather than the pseudo sales pitch so often heard from industry chiefs. The office has an air of friendliness, noticeable throughout in small extras like the staff book exchange in the lounge and line of ladies’ perfumes in the bathrooms.
Perhaps as an antidote to his time at multi-national corporations, Rushton mentions the lack of fuss and politics as one of his favourite aspects of Walker Crips’ culture.
‘The quality of the people here is a given, but the character of the people is very unusual in that there is a degree of integrity and courtesy and fairness about the business – both at an individual and corporate level – that I’ve not seen before. It completely cuts out a whole political aspect of decision making.’
Freedom seems chiefly what Rushton values from working at Walker Crips. This extends to easy access to chief executive Fitzgerald, which means change can happen with a responsiveness not possible at giant organisations.
‘We can move very quickly and we have done. We can get the right people to influence decisions in very short order,’ he explains. ‘We can talk about anything and do talk about anything as it arises.’