The first is the firm’s belief that the wealth management segment is likely to continue to grow; as a large portion of the population heads towards retirement, so the needs of clients are likely to grow as more people enter the decumulation phase.
The second reason, Abberley says is that it is not an industry where one or two key players have the market sewn up – the big firms don’t account for much in terms of market share. “I am not saying the barriers to entry are low, but if you are already active in it, it is a good place to get a solid return on capital,” he said.
The final reason is that Charles Stanley needs to focus. “If your core business is humming along nicely and your have a good return on capital, good earnings per share, you can afford to look around and say: Right, what can we do as an encore. If, like Charles Stanley, your core business is not humming along, then you have to focus,” he said.
Adding: “We have a big task ahead of us and I am confident we can do it, but we don’t want any of the senior team having to go off and look after peripheral businesses.”
That said, the firm is committed to becoming a fully vertically integrated wealth manager, rather than specialising too narrowly, because Abberley says, the type of service its clients want has changed.
“10, 20 years ago, what clients really wanted was purely investment management they wanted us to manage their investment portfolios, they wanted us to advise them. Increasingly, these days ,those same clients need financial advice of some sort, so , in many ways there is a lot of opportunity because of the flexibility people now have, but equally, there is some remarkable complexity involved.”
As a related point, he said a combination of technology and regulatory costs have served to increase the fixed cost of a wealth management client relationship. This has meant that for many companies servicing the smaller end of the affluent segment has become uneconomic. One of the ways to address that, he said, is to have their funds managed in collective vehicles or models. It is a way of addressing that advice gap.
