Former Lloyds Private Banking duo Chris Payne and Tom Milson chose to leave the company two years ago after deciding to act on their belief that ‘we could do it better’.
The pair had worked within the bank’s high net worth and ultra-high net worth division in Mayfair. But their desire to remain in the West End heartland posed them a dilemma: could they afford to go it alone, as originally planned, or should they partner with a larger firm?
They quickly realised that the former was not a realistic option and after a conversation with GWM Group, a global wealth management business with €3 billion (£2.6 billion) of assets under management and advice, they decided to partner with the firm. They launched as GWM Investment Management, effectively opening as the group’s London office.
‘We did consider doing this ourselves at the beginning, but the capital required to do that and to be based in prime central London just wasn’t feasible,’ says Payne, GWM Investment Management’s managing director.
‘They actually approached us. The connection came about because they have offices all over the world and an ex-colleague of ours joined them, based in the Middle East. He contacted both of us and said GWM would like to set up shop in London. He said “they have a long-term view, you guys have the right profile – and then we went from there”.’
The partnership with GWM Group helped Milson and Payne mitigate one of the biggest challenges that most fledgling wealth management businesses face – the high amount of initial capital needed to launch and see it through to profitability, and the fear of breaking away from a financially strong parent.
Just two years in, the duo are delighted with the company’s early progress. Although they would not disclose any figures, given it is still early days, Payne says the firm is already in profit.
‘Honestly, when you price up something like this you do not expect to be profitable from day one – especially being based here [in Mayfair] and if you want to recruit the best people, they also cost, so the costs are quite high from day one,’ says Payne.
The pair both look back on their time at Lloyds with fondness though, describing it as a great place to hone one’s skills as a wealth manager. Milson, who is executive director at GWM Investment Management, had spent around 20 years at the bank, while Payne had been there for six, having also spent two years as head of international services for Aspinalls Family Office.
However, while size may offer financial stability, the amount of change at the top in large financial institutions, in terms of both management and strategy, made long-term planning difficult.
‘There is a lack of continuity at the higher level in some of the large firms because there is quite a bit of turnover in the senior management teams,’ Milson says.
He says each management shake-up inevitably resulted in the incoming team immediately putting everything under review, creating an air of uncertainty.
‘Then nothing happens for six months until they’ve got to know the business. So you have this cycle of constant change,’ he adds.
Although they have arguably just swapped a very large parent for a smaller one, the pair insist they are very much their own business that reflects their beliefs in how wealth management should be approached.
GWM Group provided the financial backing and a brand to trade with, but Payne and Milson shaped the business proposition themselves. Aged just 36 and 38, respectively, both see their roles at GWM Investment Management as the last jobs they will ever have.
‘We are leveraging their brand, but we consider ourselves a brand as well,’ says Payne.
‘So we really wanted our group identity to shape the business. We are the board, we make all the decisions, we are responsible for recruiting, putting the proposition together, and deciding on marketing strategy – and we decide which clients we take on and which ones we do not.’
Milson adds: ‘Personally, I found it was almost like a breath of fresh air with the senior management team doing the day job. It is pretty simple if you do the day job, then you fully understand the client experience.’
GWM Investment Management offers a range of services, from investment consultancy and financial planning to tier one visa investment management and acting as professional trustees.
The firm also plans to start advising on and sourcing private equity deals for clients, acknowledging that many want more than just core portfolios. GWM has been hiring a number of different specialists as it looks to build up its team. These have included former Lloyds Private Banking colleagues, most notably Rob Hodgson and Paul Allen, who Milson and Payne previously worked alongside at the bank’s Mayfair office.
‘Our two main specialties are investment management and wealth planning. In terms of investment management, we run some money in-house and then we also have an investment consultancy practice and that is more relevant to ultra-high net worth individuals and trustees,’ Payne says.
‘Our ideal client is probably a family and they probably have a net worth of say £400 to £500 million.’
However, the pair admit that winning new clients can be more challenging as a small, new company. While some will like the idea of dealing with more of a boutique operation, others draw comfort from being serviced by a large financial institution. Plus the latter has a readymade flow of incoming clients.
‘Previously, we did not have to rely so much on referrals necessarily because we were in a bank and it is a retail network.’
Now, the pair have found that client referrals have become one of their primary sources for new business. ‘In terms of getting a referral from a client, I can think of one client who has sent me his parents and his best friend, and that is really endearing as it means we are obviously doing something right,’ says Milson.
‘It gives us an opportunity to go out, see how good our proposition is and when people come back for more you actually know you’re doing something right.’
The duo say their approach to looking after clients is very much collegiate, which could be in stark contrast to life at Lloyds at times, where individuals and teams often focused solely on their own books of business.
This is particularly important for a small business, Payne says, in case ‘one of us gets hit by a bus or get stuck in the snow’, so the idea is very much for the client to have a relationship with the firm.
‘We talk amongst each other a lot as well,’ Milson says.
‘I know if Chris is doing something with the client, because we’ve been talking about it, and it just comes back to this point about being small and nimble that it’s going to be a much better service to the client when they call up and say: “Oh, hi Tom how are you?” And I know exactly what the issues Chris has been dealing with at that time.’