If Angus Kerr, head of Rathbone's Glasgow office, is feeling the stress he does not let it show when Wealth Manager sits down with him in its city centre premises. Midway through an impressive career, the Brewin Dolphin alumni was handed an ambitious task in 2015 when Rathbones tapped him to head the company’s expansion into Glasgow.
‘It was a very challenging period,’ he admits as he pours coffee. ‘But it was an exciting time and the right move. Rathbones felt there was a hole in Scotland when it came to its regional coverage for the west coast, that is why they got in touch. But there was a lot to do.’
The firm’s move into Scotland’s second city followed rapidly on the heels of a major expansion in north east England, with the opening of an office in Newcastle. As with the hiring of Kerr from Brewin Dolphin, the Tyneside office was opened for a poached team – in that instance, from UBS.
‘Heading up an office was new to me and definitely a challenge,’ Kerr explains. ‘But we benefited from being relatively new to the firm and following in the footsteps of the Newcastle office. I am very pleased to say a number of colleagues [from Brewin Dolphin] decided to join me here.
‘A big factor that helped was that Rathbones handled much of the transition. A project management team was put in place who found this office [a stone’s throw from Glasgow Queen Street Station] and fitted it out with a lovely mix of modern and traditional decor.
‘From their end the whole process was very smoothly done so when I came and started on the first of May much of this was ready and in place.’
With Rathbones handling much of the admin and the recruitment of several of Kerr’s former colleagues for the Glasgow branch, the office head was tasked with growing assets under management.
A preliminary target of raising £200 million within two years of brogues on the ground has been exceeded, with Kerr proudly reporting that he and his team now manage £312 million, with a further £20 million in the pipeline from new clients. Though happy, he is not complacent and says the office is still sitting on much greater potential.
‘I am very pleased with what we have achieved,’ says Kerr. ‘But I would be lying if I said I didn’t want to grow the office as we have the resources to manage over £500 million.
‘I see no reason why it could not be a £1 billion office. It is fair to say an office with £312 million in assets under management is successful, but it will not remain successful if it does not continue to grow.’
Going from £312 million to £1 billion may sound ambitious, but Kerr is quietly confident and has identified the path he wants to pursue in order to get there. As well as putting Rathbones’ name out and about through Glasgow, Kerr wants to develop more discretionary fund management partnerships and use the firm’s investment heritage to add a competitive advantage.
‘We want to be the first stop for discretionary fund management for high net worth individuals,’ says Kerr.
‘To do this, we want to further increase our relationships with professionals and financial advisers. We are looking at joint ventures with private equity firms and crowdfunding platforms we know, with some conversations already taking place.’
A key part of this is recruitment and the office hopes to bring in up to eight additional wealth managers to enhance the expertise already onsite. Rathbones may be a sizeable and relatively secure wealth firm, but Kerr is fully aware no business is immune to fee pressure when it comes to investment performance.
In particular, he is concerned that cost pressures are forcing more wealth managers to stick clients into cheaper products regardless of their individual needs or the funds’ overall performance.
‘Increasingly, some firms are going down the route where they are more about providing products than solutions,’ says Kerr.
‘For instance, there is robo-advice. Now, robo-advice has a place in the industry but there are many clients who want a relationship with an investment manager and are not concerned with a race to the bottom. The competition are becoming less relationship-led and will tend to focus more on things like collectives.’
Many feel the use of collectives, which can save a wealth manager time and effort, can actually end up costing more for the client when fees are layered up. Therefore, Kerr wants to ensure the Rathbones Glasgow office is creating its own local base of expertise in a bid to stand out and attract clients. He says: ‘Collectives are expensive so we are doing investment directly, creating bespoke portfolios.
‘Collectives are already expensive enough and under Mifid II, underlying fees will be declared, which could make for unpleasant reading for some. Rather than blanket-buying, we concentrate on getting the very best in collectives when we need them, and a lot of negotiations go into these processes.’
Discussing his plans for expansion, Kerr says that while potential recruits have not yet been formally approached, he believes he already has an idea of who he would like to get, and points to recent, ongoing M&A as a potential hiring agent.
‘We are looking at other teams from firms to bring in,’ he says candidly. ‘We have already had a number of people approaching me for jobs. These are people who have not had great experiences with their current firms and do not like what these businesses are doing to client relationships that they have built up themselves.
‘We could be beneficiaries of the chop and change we are seeing in the industry, with some teams dissatisfied with the mergers happening above their paygrade.’
With an eye on growing assets and bulking up the office’s staff, Kerr agrees he has a lot on his plate. However the Scot is happier to focus on this instead of the ‘macro noise’ he says is proving more of a distraction than anything. With the industry tackling Brexit, Trump, ‘IndyRef2’ and now a surprise general election, Kerr says he expects more questions to be asked as times could get tougher.
‘Right now, a lot of clients are asking about Brexit and Article 50,’ he explains. ‘IndyRef2 has not had quite the same reaction so far as it did last time. But in time, as with the last referendum, our clients will want to ask us about it and will come to us with their concerns and questions.’
Preferring to take a long-term view, Kerr says he is confident Rathbones’ scale and resources will help his office gain a competitive advantage in these uncertain times.
‘Fortunately, we have a lot of research and data at our disposal – with Rathbones producing a lot of bespoke white papers – so we are well placed to have informed and sensible discussions with clients.
‘It is always very important to put some information out there if you can. But Rathbones has been around for hundreds of years, survived wars and rebellions, so we will survive this. We just need to focus on the long term, not just the short term.’