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Why team buys are a thing of the past for Brewin Dolphin

by Danielle Levy on Dec 12, 2013 at 11:20

Why team buys are a thing of the past for Brewin Dolphin

The acquisition of teams will no longer be part of Brewin Dolphin’s growth strategy, says head of investment management Stephen Ford, who questions the industry’s preoccupation with ‘buying assets off each other’.

It marks a change for the national wealth manager, which has traditionally proved opportunistic by hiring teams in new areas.

Ford says organic growth as a result of investing heavily in technology to drive efficiencies now takes precedence, alongside adapting the firm’s proposition to the needs of modern consumers.

His comments follow Brewin’s preliminary annual results, in which it revealed the costs associated with its strategy to improve profitability and efficiencies had weighed on earnings. Redundancy costs amounting to £4.8 million, a £1.1 million additional Financial Services Compensation Scheme levy, and £6.2 million paid out largely as a result of onerous contracts relating to property caused pre-tax profits to fall 4% to £28.6 million on the year.

More positively, Brewin has reaped the benefits of moving to a unified pricing structure with a 25% rise in fees to £152 million over the year, and its discretionary assets rose by 17% to £21.3 billion.

Ford said he was proud of what the business had achieved after a tough year. ‘We are pleased. Candidly, this business has been through a hell of a lot of change this year. We had a board reshuffle, we closed branches and we let 125 staff go, but we carried on repricing and delivered good results.’

While in March executive chairman Jamie Matheson stepped down to be replaced by David Nicol, accompanied by a number of departures from the board, Ford said the new management team had naturally reviewed the company’s strategy.

This was down to the significant changes in the market over the past 18 months. ‘All we have been doing is building on the foundations built by Jamie Matheson,’ he added.

Organic growth

As the company targets an operating margin of 25% by the end of the financial year in 2016, Ford said organic growth was top of the agenda. He noted new Financial Conduct Authority rules on incentives and conflicts of interest could represent a shot across the bows when it comes to team acquisitions.

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