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Why are hedgies pouncing on wealth managers?
by Robert St George on Dec 19, 2013 at 09:26
WH Ireland, meanwhile, has been quietly recovering from the shock departure last December of its chief executive Paul Compton.
Its share price collapsed by 28% in one day, and several other senior managers followed Compton out of the door amid an investigation into employees’ trading in the shares of other companies.
A subsequent court case has now been settled and WH Ireland is focusing on the integration of Seymour Pierce, the private client business it purchased from administrators in February. WH Ireland has tipped the positive impact of this deal to become apparent next year.
The activity from such investors comes alongside the revival of interest in wealth managers from private equity houses, with Permira snapping up Bestinvest and now gunning for Tilney.
‘We have seen a lot more interest in wealth management recently,’ says Catherine Tillotson, managing partner at the Scorpio Partnership.
What Bestinvest, WH Ireland and Walker Crips also share are stockbroking arms. The rationale for integrating this into wealth management is that the broker serves as the entry point for new clients, who can then be moved into higher value propositions.
The trouble has been that these brokerages have come under immense pressure from the likes of Hargreaves Lansdown. ‘Stockbroking is a model people are looking at and wondering which way it will fall,’ Tillotson said.
Yet she thinks the doom-mongers may be proved to be unduly pessimistic in their outlook for broking, with a little help from the regulator. ‘There was this concept of simplified advice, which I think is back on the agenda of the Financial Conduct Authority.’
If the regulator does emphatically give simplified advice its stamp of approval, the market could well rerate brokers.
Stuart Duncan, an analyst at Peel Hunt, links this to the advice gap opened by the retail distribution review. ‘Those individuals still need to do something with their money, so they still need advice.’
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