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Profile: Brooks founder on why the industry has been behind the curve

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by James Phillipps on Jun 12, 2014 at 00:01

Since Brooks Macdonald first graced our profile pages, the company’s discretionary assets under management have surged fivefold to just shy of £6 billion. And while outwardly this growth has appeared seamless, that belies the incredible amount of work that has been done behind the scenes to oversee this.

Brooks, launched in 1991 as a fee-based discretionary asset manager, has regularly been ahead of the curve. Co-founder Jonathan Gumpel admits he is surprised it has taken this long, particularly with the onset of the retail distribution review (RDR), for many of his peers to catch up.

Similarly with suitability and the centralisation of investment processes – two key tenets of the Financial Conduct Authority’s greater scrutiny of the sector – Brooks has already been through this process without regulatory prompting.

‘We’ve grown a lot over the last few years. In 2008-09 after we did a review of our investment management approach, we realised there were lessons we could learn and we updated a lot of things,’ Gumpel says.

‘One factor was that as the amount of money we were seeing coming from professional advisers increased, and with multiple offices, we had to make sure a Brooks Macdonald portfolio was recognisable whichever office you go to.

‘We always tend to be introspective and focus on what we are doing and how we can do it better.’

 

To help achieve the desired commonality of performance and ensure suitability, Brooks brought in a portfolio monitoring system in what proved to be a multi-year project.

This entailed using a version of third-party firm Bita Risk’s software and adapting it to provide a proprietary system that better suited Brooks’ needs.

Like many in the industry, Brooks had previously used a sampling methodology when it came to portfolio monitoring but wanted to move to a more iron-clad approach. ‘We started working on this four years ago and it was fully completed two months ago,’ Gumpel says, underlining the complexity of the process.

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