Close Brothers Asset Management chief executive Martin Andrew was always intent on a career in financial services and after almost 25 years in the business is still finding fresh challenges.
He says: “I was genuinely interested in economics and that led me to an interest in financial services and the City, so when I left university I only applied to what were then merchant banks.”
He became a graduate trainee at Kleinwort Benson and worked in different parts of the business before moving into investment management as an analyst and trainee portfolio manager. “From that moment on, my entire career, either directly or indirectly, has been related to asset management.”
But he says he was an indifferent analyst and decided his future lay elsewhere. “I came to the view, rightly or wrongly, that I was not going to be a very good portfolio manager.
“I noticed after a year or so that I thought that every single day seemed the same whereas some of my colleagues who were more natural investors thought every day was different. They thought the markets going up and down every day was different, I thought it was the same and markets would be doing the same in 20 years time and I could not bear the thought of still doing the same thing as I am now.”
Having decided he wanted to do an MBA at Harvard, he applied and spent the next two years studying in the US. “I had always wanted to do an MBA, since leaving school, and set myself the goal of going to Harvard. I was lucky enough to get a scholarship and borrowed the rest of the money.”
After completing the two-year programme, Andrew joined consultants McKinsey and Co, working across a range of financial services businesses and his career has seen him work in all sections of the asset management business. This has included a second stint in the US working for Merrill Lynch Investment Managers following its acquisition of Mercury Asset Management in the late 1990s.
His varied experience comes in useful in his role as head of Close Brothers asset management business which is one of three distinct businesses within the Close group, the others being private banking and securities trading.
Andrew says: “They are very different businesses and Close has always had a policy of its businesses being run in a focused and separate manner. However, that approach has softened over the last two years. We are very comfortable having conversations with and working with our colleagues in the bank and at Winterfloods.”
Andrew’s main focus is on the overhaul of the asset management business and knitting together the slightly disparate elements.
“Where the autonomy and separateness has changed is within the asset management business. We too were made up of a series of separate businesses, which have almost entirely been integrated into a single business.”
As well as an institutional business, Close Brothers has a private client advisory business and an intermediary business offering discretionary investment management for IFAs’ clients. Behind these three client divisions is the asset management capability which serves all three distribution channels.
Andrew says there is no conflict in having an in-house advisory business alongside a third-party management business targeting IFAs.
“We are in the advice business as well, so we know the challenges, the issues and the obstacles IFAs are facing in their day-to-day lives because we are facing them too. We know about the challenges of integrating a really good investment proposition with a really good advice proposition because we are having to do it too. We understand some of the technology issues, we understand the regulatory issues, not because we have read all the stuff but because we are having to do it too. The other thing to point out is we are eating the cooking that is coming out of our own kitchen. The investment proposition we are offering to IFAs is exactly the same set of propo-sitions we are offering our own clients.”
He says he expects to see growth in discretionary business due to the RDR. In the longer term, he is more excited by the growth prospects for direct and intermediated business from other drivers. “I think it going to be very significant but I do not think it is all driven by the RDR. I am also optimistic about the growth of the IFA market. Despite everything, we still live in an economy that is growing, we still have a wealthy population and that wealth is still growing. The average age of the population is rising, the state is inexorably pushing us to take more responsibility for our own retirement and our families’ financial wellbeing, life expectancy is increasing, technology is facilitating an awful lot of information and all of that will increase the demand for financial services.”
The Close Asset Management business saw a significant boost last year with the acquisition of Chartwell, which brought assets under management to £8.8bn.
He says the business is considering further acquisitions, particularly as a way of boosting the spread of the company.
“We would be keen to do a few more, not a huge number but we are keen to expand the scale of the geographic footprint of the advisory business.”
The asset management business is in the middle of a five-year programme of investment, with between £18m and £20m to be invested over three years. As a result, Andrew says the business’s profitability has been reduced in the short term once the impact of the investment on everything from market research to IT has been absorbed.
“We are setting about building a business that will create value for the shareholders. We see a significant opportunity in the marketplace and one that should make a significant difference to Close Brothers group.”
Education: University of Leicester, Harvard Business School
Career: 2008-present: chief executive, Close Asset Management; 2005-08; head of private client business, Close Wealth Management; 1996-2004: Merrill Lynch Asset Management; 1994-96: Mercury Asset Management; 1991-93: McKinsey and Co; 1986-89: Kleinwort Benson
Likes: Family and being outdoors, hiking, cycling and sailing
Dislikes: Laziness and closedmindedness
Book: Almost anything on military history, particularly by John Keegan, Max Hastings and Antony Beevor
Film: A Bridge Too Far
Album: The Wall by Pink Floyd
Career ambition: To create a leading and highly regarded asset and wealth management business at Close Brothers
Life ambition: Family, health and happiness
If I wasn’t doing this I would be…Starting my own business