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How six wealth firms incentivise their staff

We asked six managers what they think about Labour's share distribution plans.

Under a Labour government, employees can expect to be given equity in their companies - getting up to £500 a year each - but what do wealth bosses think about this proposal?

Shadow chancellor John McDonnell unveiled the plans to set up ‘inclusive ownership funds’ for firms with more than 250 employees at the Labour conference last month, garnering a lot of reaction. In an industry such as wealth management, where there is a lot of movement of staff between firms, company bosses have a number of ways to incentivise staff already, with equity ownership being one.

Taking advantage of the number of industry heavy-hitters who attended the recent Citywire Wealth Manager Retreat at The Grove in Hertfordshire, we asked wealth bosses what they thought about the Labour Party’s plans and how they incentivised their own staff.

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Under a Labour government, employees can expect to be given equity in their companies - getting up to £500 a year each - but what do wealth bosses think about this proposal?

Shadow chancellor John McDonnell unveiled the plans to set up ‘inclusive ownership funds’ for firms with more than 250 employees at the Labour conference last month, garnering a lot of reaction. In an industry such as wealth management, where there is a lot of movement of staff between firms, company bosses have a number of ways to incentivise staff already, with equity ownership being one.

Taking advantage of the number of industry heavy-hitters who attended the recent Citywire Wealth Manager Retreat at The Grove in Hertfordshire, we asked wealth bosses what they thought about the Labour Party’s plans and how they incentivised their own staff.

Leave a comment!

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

Lester Petch, CEO, TAM Asset Management

‘I’m a firm believer in [employee share ownership]. I don’t know the proposals inside out, but from our perspective we are looking at how we create the right share option scheme, the right way we can get our staff who are retained and want to stay retained into a share option scheme that gives them part of the growth that they’ve built. I think that’s really important. It goes with them enjoying what they do. If they can learn how they’re going to make money by having fun while they’re doing it, then an option scheme is a great thing.

‘It’s about keeping people contented with the way they work. I don’t think it’s always about money, I don’t think it’s always about the operating environment, because we all work in a same operating environment. It’s more about people enjoying the way the business is run, the way they work within that business, the responsibility they’re given, and how they’re left to get on with the job. So I wouldn’t go back to the money, and back to the “best job in the world”, I’d go back to have fun while you’re doing it.’

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Peter Montague, CEO, Montage Wealth Management

‘You’ve got to look at what’s right for an individual business. Saying you’ve got to do share plans and things like that, I’m not sure. It’s a bit of an odd one.

‘For us, staff retention is hugely important. It’s taken us a long time to find the right team, we’ve had some go, we’ve had some come, and it’s very hard to find the right people. Once you’ve got the right people you’ve got to incentivise them to stay and look after them, so firstly we pay strong salaries and look after them with the right benefits, the right holidays. We encourage study, we give study leave, we’re very much invested in staff growing and taking themselves forwards.

‘And there are incentives for younger staff to come through and get their shareholdings and become more active and a long-term part of the business. That’s already started, our director is a shareholder now. He was a shareholder at 30, and the next couple of guys who are going to come through already know their plans and they will be able to get their shares. So that’s the way we would do it.’

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John Crowley, CEO, Hawksmoor Investment Management

‘Hawksmoor is a small company and right from the start we had wanted all our staff to have an equity stake in the company. We have very purposely given staff, albeit a relatively tiny amount for many of the junior staff, at least some stake in the company in the future of their company, something along the John Lewis type of role. So the principle I agree with 100%. The mechanism for achieving it I think is deeply flawed, though.

‘I think that forcing companies to give 10% of equity to staff could act as a disincentive to investment. In other words, if you’re an investor in a start-up company or a young company or even in any company in effect you could face 10% dilution, so I think that is a flawed way of approaching it. As to what the right way of approaching it is, I don’t know.

‘Firstly, as I said, even if it’s a tiny amount, we give them some options over the equity of the company, and we feel we pay them a decent basic salary, and if they are fee-earning staff they get a decent bonus based on the profit of their team.

‘In addition to the non-fee earning staff, mainly the staff involved in the central services of the business, they also receive an annual bonus based on the profitability of the company as a whole.’

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Peter Lowman, CIO, Investment Quorum

‘I think is quite important to keep staff incentivised. One of the quotes that supports that is something Richard Branson said a number of years ago: “If you look after your staff, they look after your clients”.

‘A lot of companies now are looking at things like Perkbox, which is a web-based operation which you pay a small subscription to each month and each staff member has an opportunity to get discounts and stuff like that — which I think is also important. This is especially important in small companies over the larger institutions.

‘We have a very small business and our business is basically driven on faith. Our clients respect our staff highly. We are staff driven, so each member of our staff owns shares in our business, so that incentivises them to stay and obviously they have things like dividends attached to their shares.’

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Gavin Haynes, managing director, Whitechurch Securities

‘I think the philosophy behind employee ownership is good for everyone. It makes employees stakeholders. One issue is the limits they put on it – that is flawed for really incentivising people. The basic philosophy of encouraging employee share ownership is excellent.

‘Personally, it is a family-owned business I work for, and there are bonuses related to profitability for staff. What you want is your staff and the owners aligned, and that’s fundamental to having a successful business.’

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Stephen Girling, managing director, SG Wealth Management

‘The principle of employees having ownership is a good one. It does give them something more to focus on than the daily grind.

‘I think Labour’s idea of giving those away rather than having a way of encouraging employees to buy in or put some value on it is a mistake. It is going to simply be seen by most employees bit like a pension scheme. If you’re given shares that’s great, but they don’t always put a value on that. Whereas employee benefit schemes tend to be given more value. I can see where Labour are coming from trying to get more engagement so that you don’t end up with just nationalised industries, where employees are not incentivised and you just got a job for life. Whether or not they implement it in the right way, take it from the rich and give it to the poor, might not be best way of actually bringing that about.

‘For my own firm, we are looking at the alternative employee benefit schemes. There are three options we are looking at. I recently made an acquisition of the remaining shareholders, so I’m not the 100% owner, and that’s given me a chance to put in my five year plan to look at what I can do. I have a number of employees who have been there for a long time now and it would be nice to make sure they feel they have a stake in the business and are working with me towards the future.’

 

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