Rowan Dartington will use the next few months before its acquisition by St James Place closes to review teams and bulk up staff.
Graham Coxell, executive chairman at Rowan Dartington, which was bought by SJP for £34m, says the company will need to boost its current 100 workforce and hire more client-facing staff to help service new SJP clients coming on board.
SJP bought the firm to enable it to have an in-house DFM team for clients.
SJP chief executive David Bellamy says: “The supplementary services, which include advisory portfolio management, direct equity, trust and charity portfolio management, will broaden the range of investment options we can offer to existing clients and enable us to access new clients who value such services.”
“We’ve already had conversations about what the scalability plan looks like,” says Coxell. “Teams are working through that, it’s a case of making sure we have the right people in the right positions to provide first-class service.”
However, it remains a priority for existing Rowan Dartington clients not to feel pushed out by the likely onslaught of SJP clients, says Coxell. Existing investment executives will continue to work with existing clients, and with new SJP clients “if they have capacity”.
He says: “The priority is absolutely to make sure existing clients are looked after then to grow the investment executive base to support it in line with the planned increase in new business coming through.”
SJP says it has been looking to introduce an in-house DFM service for some time, with the Rowan Dartington deal aimed at attracting more high-net-worth clients, as well as encouraging advisers to join SJP who want to outsource their investment proposition.
Coxell says: “For SJP they felt given they are the UK’s largest wealth manager it made sense for this to be brought into the core capability of the group. They have circa 3,000 advisers, so not having a core group DFM proposition is seen as something that needs to be filled.”
Rowan Dartington will continue to remain in its Bristol offices, retain its own brand and run as an autonomous business from SJP, says Coxell.
Finer details of the deal, such as the charging structure for any DFM services offered by Rowan Dartington for SJP clients, have not been finalised.
Currently Rowan Dartington charges range from 35 basis points for a collective portfolio service run on another platform, to 65 basis points for the same service run on Rowan Dartington’s platform. A full, bespoke discretionary service is available for around 1 per cent.
SJP clients are likely to span the range of options, says Coxell, although all assets will be run on Rowan Dartington’s platform.
Coxell has plans to grow the business, with it currently having £1.2bn in assets under management.
Coxell undertook a management buyout of Rowan Dartington in 2011, buying it from Astaire Group. At the time it was said that the wealth manager had £1bn in assets, but Coxell says actual fee paying assets were nearer to £500m.
Although not putting an exact figure on his five-year growth plans for the business, Coxell says assets will be in the multiple of billions. “I think we could shoot the lights out,” he adds.
Rowan Dartington has seen its share of turmoil in recent years, with a £511,000 fine in 2011 from the Financial Services Authority in relation to a £1.4m black hole found in the firm’s accounts.
More recently it has seen significant staff departures, with a group of staff leaving in 2013 to join Bristol rival RC Brown Investment Management. The departures included co-founder and head of business development Andrew Morris and fellow co-founder and head of equity research Mark Sevier.
In response, Rowan Dartington has bulked up staff, bringing on board John Betteridge as chairman of its asset allocation committee and Tim Cockerill as investment director, among other hires.
SJP approached Rowan Dartington about the purchase, with Coxell saying the wealth manager was not looking for a buyer. However, he is sure this is not a merger for the sake of asset stripping, as has been seen in other wealth manager mergers.
“Deciding to sell Rowan Dartington was one of hardest decisions of my life,” says Coxell.
This will not be the last of consolidation in the wealth manager industry, predicts Coxell.
Around 70 per cent of industry assets are with the top 10 players in the wealth management industry, estimates Coxell, leaving the remaining 30 per cent of assets with around 100 wealth managers.
“How on earth do these small players offer an attractive proposition to the market in today’s regulatory environment, it’s about reach and distribution and financial stability,” he says. “I think at a macro level we will see more and more consolidation, and more vertical integration.”