Wealth management firms are continuing with their planned UK regional expansion despite the unfavourable economic and investment environment.
Wealth management firms are continuing with their planned
Credit Suisse last week opened an office in
Nick Gill from Coutts told WealthBriefing that whilst there is a perception that private banking is something that happens within the M25 orbital motorway around London, Coutts’s experience is that is not the case at all.
"We are finding that there is significant growth in the number of [financially] successful people all over the
Around two years ago, SG Hambros commissioned research by Datamonitor, the research company, to look at the potential size of the regional market and identify wealth hotspots.
"The same type of names tend to arise: the main urban centres, but also places such as East Anglia and the south east of England,” said Jonathan Norbury, director of private banking with responsibility for regional offices at SG Hambros. He anticipates faster growth in the regions than in
Credit Suisse’s December 2007 research into regional economies around the
Levels of business start ups increased 8 per cent in the East Midlands and 12 per cent in the North in the last four years, more than double the rate of
Confirming the trend, Barclays Wealth 2007 research found that whilst there is a greater concentration of wealthy individuals in the South East, with London and Hampshire the top two in the list of counties with the highest proportion of wealthy individuals, the north of England also featured strongly with Yorkshire placed third and Lancashire sixth. The same research also revealed that business success is now more likely than inheritance to be the route to wealth.
Richard Algar, director and head of the
”The fact that no one institution has a substantial market share represents an opportunity for a firm like Credit Suisse, which provides its clients with the services of a global integrated bank but delivered locally," he said.
Christian de Juniac, of The Boston Consulting Group, the research and consulting firm, believes the trend of private banks setting up regional offices is long overdue. Until three years ago, with one or two notable exceptions, there were few
“Wealth has become hugely diverse. It is important that relationship managers share interests with their clients and today that client is as likely to be a metal basher from
Mr de Juniac said
Whilst Coutts has had a substantial regional presence in the UK for decades and opened its first regional office back in 1961, in Eton, Mr Gill says that the pace of expansion has accelerated in the last few years, and Coutts is currently opening about two to three offices a year.
But there is a degree of cynicism around wealth management operations opening locally as some firms opened and quickly pulled out in the aftermath of the 2000 stock market crash. Some would argue that the current economic environment is not conducive to regional expansion. So what is different now?
Credit Suisse said that regional expansion is part of its overall growth strategy in its private banking business and its plans have been in place for some time:
“It reflects Credit Suisse’s commitment to the UK business and to our regional strategy that we are going ahead with opening offices even when the economic conditions are tough,” said Mr Algar.
Mr Gill said that Coutts’s philosophy is always to go to a region and stay there: “We would see this regional expansion as a long term game, you don't go planning to close down later on."
There are various models adopted by private banks in catering for regional wealth. SG Hambros has offices in centres including
Credit Suisse supports its regional offices in
“In the past private bankers have travelled from
This is echoed by Mr Norbury who recruits bankers that have been operating in the relevant regions and know their areas:
“They can get right under the skin of a community," he said.
Whilst recruiting bankers with local knowledge and connections is clearly desirable, finding suitable candidates to lead private banking teams in the regions is a particular challenge as the talent pool of experienced private bankers tends not to be particularly deep. “It is undoubtedly harder to recruit experienced bankers in the regions, but we won’t hire unless a candidate is high quality,” said Mr Algar.
Anthony Hill from the Leeds office of recruitment firm Darwin Rhodes cites the loss of a team of wealth managers to a major investment management firm as an early indication that financial institutions in Leeds need to become “more proactive, even aggressive” in sourcing high calibre individuals and retaining them. He points to lateral hiring as one possible solution, which is something that Credit Suisse has used successfully employed, offering structured initial and ongoing training to recruits from outside the industry.
“The hire of a former corporate lawyer, for instance, has been a great success in
However, Mr Hill says it is essential that companies moving to the region understand they are not in the City anymore: “Some firms have made the mistake of taking their top performers from