Liverpool strong in wealth management - 29.03.2010

Financial Times (similar articles also appeared in Wealth-Bulletin, Wealthnet and Liverpool Daily Post)

Liverpool’s £12bn wealth management industry is the biggest outside London , a report by a leading independent industry benchmarking group has found.

The port pipped Edinburgh and Manchester as the “second city” of wealth management, according to the ComPeer survey of 148 private banks, private client investment managers and stockbrokers.

The report, produced for Professional Liverpool, which promotes the city’s professional services sector, identified the north-west as the strongest region outside London, with Liverpool hosting the biggest sector.

The region had £24.8bn ($36.9bn) worth of assets managed at the end of 2008 in 145,930 customer portfolios, with companies generating £249.3m in fees, commissions and other charges annually. The city accounted for £121m in revenue and managed £11.6bn of assets, with Manchester managing £10.7bn and Edinburgh £10.6bn.

Mark Chadwick, chief executive of Professional Liverpool, says: “The results will not surprise the industry itself but for the wider world this is probably a very well kept secret and we’re happy to promote it.

“The findings of the report completely validate the city’s strength in this sector. Part of the region’s attraction as a destination for wealth managers are its competitively priced staff and premises and, despite turbulent economic conditions and corporate changes, many of the major players have chosen to operate in the city.”

Deutsche Bank used Liverpool for its entry into asset management when it bought Tilney Investment Management in 2006. Tom Slocock, chief executive of Deutsche Bank Private Wealth Management, says: “The city remains a key location in our network of regional offices which serve the significant wealth located outside of London and the south-east.”

Tilney was the fourth-biggest independent provider of wealth management services in the , with assets under management of about £6.7bn and 15,000 clients when Deutsche bought it. It has dropped its name but kept its offices in London, Edinburgh, Glasgow, Birmingham and Shrewsbury .

It was founded in Liverpool in 1836 and, along with Rensburgs (now Rensburg Sheppards), founded in 1873, and Rathbones, established in 1742, it formed a triumvirate of big groups that ensured Liverpool ’s strength in a very fragmented market. At the height of the Victorian era, the city had more millionaires than anywhere outside London .

Andy Pomfret, chief executive of Rathbones, the listed private client wealth manager, says: “Investment management and private client tends to be a domestic business. We are the third-biggest discretionary asset manager and have only 3 to 4 per cent market share.

“There is a cluster in Liverpool ... dominated by three private client firms in a way that Manchester is not. Three firms here have 80 per cent of the market.”

Rathbones and Rensburg Sheppards remain in the top three asset managers, after Brewin Dolphin, and are well placed to benefit as the industry consolidates.

Panmure Gordon, the institutional stockbrocker, recently arrived in the city and Mr Chadwick believes the report’s findings will encourage others to join it.

Although Rathbones has moved its head office to London, it manages £1bn of assets and employs 300 in back office functions at the Port of Liverpool building. Rent is nearly £15 a square foot rather than £90 in London’s New Bond Street.

“You are fishing in a deep pool because there have been a lot of financial institutions here,” says Mr Pomfret.

Nearby Chester has a knot of such institutions, including M&S Financial Services and Halifax, while Alliance and Leicester is based in Bootle and Co-operative Financial Services in Skelmersdale.

At the end of 2008, Liverpool had 64,586 portfolios and Manchester had 58,643 against ’s 91,058. London accounted for two-thirds of all assets under management nationwide, with the north-west managing 7.2 per cent, ahead of the south-east’s 5.9 per cent, although at £289m the latter generated more revenue. This remains a challenge for the north-west, where portfolios are on average smaller.

However, David Owen, senior investment director of Rensburg Sheppards, says Liverpool was a “centre of excellence” that should grow. He says: “The past three or four years have focused clients on the importance of long-term relationships in managing their wealth, which benefits our model.”

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