Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a744182

Why we quit Brewin for Charles Stanley: Leicester Six reveal warts and all

by James Phillipps on Apr 03, 2014 at 14:52

Each of the defendants considered the changes ‘shortsighted and damaging, both to clients and to their own individual businesses’ and a ‘regrettable and risky change in business strategy’.

The six said Brewin introduced a minimum fee for clients of £1,000 a year plus VAT, and instructed that ‘clients who were considered insufficiently profitable should be terminated.’

They said this made many younger clients ‘unviable’, despite their longer-term earning or inheritance prospects, and damaged existing relationships.

They bemoaned the lack of flexibility around the charges and said as a result ‘fee increases were on average in the region of 50%’ for its clients.

Furthermore the fee hike was communicated to clients through a centralised mailing, which the six considered ‘badly written and heavy-handed’.

Added to this, a change to the group’s branch cost and funding structure hit the Leicester office hard, they claim, due its substantial IFA and dealing business. The defence said Brewin did make ‘transitional payments’ to the Leicester office in 2011/2012, but claimed that the changes were still to its ‘long-term detriment’.

‘Footing the bill for the FSCS levy’

Around the same time, the defence said Brewin implemented new changes to the office’s bonus pool, which was shared between all of the six barring Sawyer.

The six believed that most wealth management companies paid the Financial Services Compensation Scheme levy centrally and were aggrieved to be charged 10% of its bonus pool to cover the costs.

Their perception was that Brewin ‘expected its more profitable offices –including the Leicester office- thereby unfairly to subsidise less successful and profitable offices.’ The result being it hit all of the defendants' remuneration.

‘The IFA conflict of interest’

The six said the fallout from Project Amethyst, particularly the fee hike, undermined their IFA intermediary relationships and their concerns mounted through 2012 into the first quarter of 2013.

Sign in / register to view full article on one page

3 comments so far. Why not have your say?

Philip Milton

Apr 03, 2014 at 18:16

It always bemuses me.... whether or not such contracts are legally binding..... but conversely, why sign a contract in the first place if you're not intending to honour its terms at the end, whatever happens? Or, what sort of integrity is involved if you believe it is acceptable to go against such contract when relationships change?

If there is a gardening leave period or a no-contact or no direct solicitation clause, then shouldn't it be adhered to regardless of your personal financial circumstances.... or even one could say the legality proven or otherwise.... don't sign in the first place if you don't like it.... and is any new firm likely to receive the same treatment or mete out the same behaviour if the 'same thing' happens in the future...?

What do others think? Is it simply a case of Brewins yesterday, Charles Stanley today and someone else tomorrow?

report this

Mr X

Apr 03, 2014 at 18:18

This is riveting!

report this

David Cowell

Apr 03, 2014 at 21:06

The answer to Philip's question is don't work for a large firm; keep it small and personal or take the consequences. Perhaps these people haven't the confidence to go it alone?

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


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

Investing for income in a changing environment


With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:

Look up the shares

  • Brewin Dolphin Holdings PLC (BRW.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Charles Stanley Group PLC (CAY.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

More from us

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet