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Rise of the super boutique: how will this new breed of firm fare?

by Elsa Buchanan on Apr 07, 2014 at 14:38

Rise of the super boutique: how will this new breed of firm fare?

The recent SandAire-Lord North Street, and Ingenious AM-Thurleigh tie-ups could well set the pace for a new trend in wealth management: the super boutique.

The Lord North Street and SandAire alliance will create a substantial player in the private investment office market with billions under management.

Meanwhile, Thurleigh and Ingenious are set to combine their investment teams and manage £1.8 billion in discretionary private client assets and platform-based model portfolios.

But is this the way forward for every boutique that is thinking about the future, looking for scale or feeling the pinch as regulatory costs grow?

Thurleigh’s CIO Charles MacKinnon said there was no pressure to merge with Ingenious AM as his business is and will likely remain profitable. However, the prospect of heightened regulation and succession planning provided motivations to team up with Ingenious AM, which manages some £1.5 billion in assets.

‘The rationale behind the deal was very clear our side and theirs. We think this is an increasingly regulated industry and that regulation will intensify rather than loosen. We will be better placed as a £1.8 billion organisation rather than a £300 million organisation.

‘This is just a fact of life and we will better placed to address and understand those things. From our side it is important to look forward to the next five years,’ MacKinnon explained.

McKinnon added the deal was driven by the cultural fit with Ingenious and a keeping one eye on the future.

‘I think the luxury we had is that we are well regarded and profitable and didn’t have to do anything. David Rosier and I were very clear about that to investors, clients and ourselves and we tried to look forward three years and could see we would be less profitable because of regulation.

'If we had not done the deal, not a lot would change. A lot of organisations are struggling with declining profitability, so they are making deals on a slightly different basis. This was very much our choice,’ he added.

This was also the rationale for SandAire and Lord North Street, which are joining forces to develop a sound proposition for the future.

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