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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

Furthermore the company’s decision to increase their presence in the financial planning market with a view to offering an integrated proposition, risked causing ‘irremediable damage to and/or an immediate conflict of interest with the employee defendants’ valuable long-standing IFA and intermediary relationships’.

‘The loss of clients in the move away from advisory dealing’

At the same time, Brewin’s move away from advisory dealing meant the team had to convert long-standing and significant clients over to ‘higher valorem annual management fees and subject to wider commission bands’.

Brewin’s Leicester office had around £200 million of money from execution-only clients. The defendants felt ceasing to offer this service was not in its clients best interests and by also increasing the ad valorem fee from 0.5% to 0.75% Brewin made their offering ‘less competitive…and impacted their ability to write new business.’

‘Baker takes a 13% income hit following change to office charges’

Again around the same period, the six claim ‘fundamental changes’ to the way individual offices are charged for centralised functions from a ‘per contract’ to ‘per account’ charge hit their bonus pool.

‘Baker projected that these changes would cause a reduction in his personal income in the region of 13% at least in the short- to medium-term,’ the defence said.

This further contributed to their growing belief that the company was ‘indifferent to the views of its investment managers and was prepared to sacrifice customers in order to charge higher fees and maximise shareholder returns’.

‘Failure to engage with Citywire’

Citywire got a name-check in the defence when Sawyer said Brewin was ‘reluctant adequately to engage or fund projects with third party organisations which could have helped penetration with intermediaries, such as Asset Risk Consultants or the 2011 or 2012 Citywire Best Large DFM Awards.’

They also claimed there was a failure to ‘ensure co-ordinated dialogue with national IFAs and networks’ to get on their panels and branded its managed funds service ‘poorly targeted’ and said it ‘generated negligible new business’.

All of this Sawyer found ‘demoralising’. Sawyer also claimed he was offered a new regional business development manager role, but this never materialised.

‘Dissatisfaction after frequently raising issues with board members’

The six claim that they had several meetings with board members throughout 2011 and 2012 to express their concerns about the fee hike and general dissatisfaction.

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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?

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Mr X

Apr 03, 2014 at 18:18

This is riveting!

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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?

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