View the article online at http://citywire.co.uk/wealth-manager/article/a753124
What does Brewin's tech U-turn mean for the firm?
by Danielle Levy on May 27, 2014 at 09:44
Brewin Dolphin’s decision to take a £32 million hit after ditching a project to implement Figaro software across the business leaves a number of important questions unanswered.
The company shocked the industry when it recently told the stock market it had decided Figaro was no longer ‘an appropriate operating system for the group’s discretionary wealth management business’. The move is significant after what is understood to be a 17-month delay in its full implementation.
Brewin said instead it will look to upgrade its existing internal systems, and stressed that improving its IT strategy remains important.
It is understood this is not the first time the wealth management business has decided not to proceed with a significant IT project. Three years ago it axed a system upgrade by Eximius, which was likely to have had a cost associated.
Brewin declined to comment on the decision or its transition plans, but a source close to the situation said the likely solution would be for it to stick with its core system, Fiscal.
This should not prove too much of a challenge, as Brewin did not completely move off the system and says it still runs well without issue.
However, Brewin might also need to grapple with the costs associated with locking back into a longer term or more meaningful contract with Fiscal, on top of charges it may have paid to the company as part of its planned move to Figaro.
The group said it will pay an exceptional pre-tax impairment charge to Figaro of £32 million in the second half of this year, and a further £15 million over the next 10 years under the original contract.
While Brewin said it is ‘engaged in negotiations to vary and settle these arrangements’, it has certainly proved an expensive decision and one that would not have been taken lightly.
News sponsored by:
As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.
Today's top headlines
With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop