Inspired by founder of The Boy Scouts Association Lord Baden-Powell, Arbuthnot Latham’s StJohn Gardner says the ethos he learnt as a scout has stuck with him to this day.
Baden-Powell’s belief that one could fulfil their potential via a positive ‘can-do’ and ‘everything is possible’ attitude strikes a chord with Gardner’s own philosophy.
He says: “Baden-Powell was influenced by his success in military campaigns as well as extensive world travel, which helped him develop this ethos. He famously said, ‘Life without adventure would be deadly dull’.”
It is this attitude that has informed Gardner’s approach throughout his career.
His journey into the world of finance began on joining Lloyd’s of London straight out of school as he became one of the youngest directors of a Lloyd’s company.
In 1987, he started working at Merrett Syndicates before joining Murray Lawrence, also part of Lloyd’s, as a director in 1991. Aged just 19, his role at Murray Lawrence as a director of three companies involved offering underwriting investment services to members of Lloyd’s of London.
From his very first role Gardner was working with high net-worth clients, and he has continued to do so.
Looking back on his 10 years at Lloyd’s, Gardner says: “These were wealthy individuals who were investing and backing the underwriting of Lloyd’s syndicates.
“In the 10 years that I did that job I was also responsible for some of the associated products, including stop loss and life assurance.
“That’s what sparked my interest in general financial planning.”
Model approach
Once his interest in the subject grew, Gardner took an MBA at the Cranfield School of Management in 1997. After completing his studies he was employed by a small private bank called Rea Brothers, subsequently consumed by Close Brothers.
“I worked there just for a year and a half as a right-hand man to the chairman and owner of the bank, and that allowed me to segue across to Merrill Lynch, a very well-known organisation, to run their managed fund service,” he says.
Gardner says the knowledge he gained at Lloyd’s “ingrained” within him the experience and skills necessary to construct a balanced wealth investment proposition.
“I was able to transport that into model investment management within an investment management organisation, and that’s what I did within Merrill Lynch,” he says.
“I was perhaps the first person to introduce the concept of tying clients to a risk level through risk questionnaires, and then to a model. It’s commonplace now but in 1998, which was when I first started doing that, it was a complete rarity.”
During Gardner’s time at Merrill Lynch, the concept of moving investment management to a centralised house process and then linking clients to defined models on a relatively strict basis was also uncommon.
This was implemented by Gardner within Merrill Lynch because it was “efficient and cost effective” but also “the right thing to do”.
After six years there he was approached by Arbuthnot Latham and offered “a blank sheet of paper” to develop an investment management proposition that was “truly forward thinking”.
Upon joining in 2005, the firm had £90m assets under management and, today, Gardner has helped to drive that to more than £1bn – a milestone the firm hit last year.
He says: “I was able to work with Ibbotson Associates in the US on risk profiling and although Ibbotson is now owned by Morningstar, we were their first UK client and developed a risk framework, the concept of an efficient frontier and a set of models.”
During the same period in 2005, Gardner also established the collectives investment service, incorporating client risk profiling, tactical asset allocation, the analysis of long-only hedge funds and investment trusts through quantitative filters, and in-depth qualitative research.
The service was extended to include direct equities and absolute return in 2009, and a euro and dollar-based investment management service in 2011. Passive services were introduced in 2012 and a range of thematic investment portfolios was formatted for private client access in 2016.
Fast forward to the present day and Gardner is a member of the executive committee and responsible for the strategy, growth, profitability, risk management and regulatory compliance of the private client wealth management business.
As head of investment management, he manages a team of 50 staff, and as co-chief investment officer he has specific responsibilities for the asset allocation-driven investment strategies.
Growth story
“Our target demographic is wealthy, self-made entrepreneurs and their families,” says Gardner. “Compared with our peers, we seem to have a higher concentration of individuals who have built up their own business, made a significant amount of money and then decided to sell that business.
“We help them through that process, on to investing that money and taking the family considerations into account. We then have the next generation of children and their children to work with as well.”
The firm is made up of 350 employees, predominantly London-based but also with offices in Dubai, Exeter and Manchester.
He says: “We are considering other overseas locations but what’s important with expansion is to ensure you have found the right team.
“We don’t start out with the idea of setting up in Hong Kong or Singapore. We first look to find a team of individuals who want to work with us and then decide if there is a legitimate business plan that takes advantage of what we have to offer here in London in terms of our centralised investment proposition, our culture and the way we do things.”
Arbuthnot’s Dubai office is a case in point in that it was set up by Gardner’s predecessor, CEO James Fleming, who brought a team on board he knew well from his previous organisation. As a result, the sucessful Dubai business turned profitable much earlier than the firm had anticipated.
Having a good cultural fit is important when expanding a business but Gardner says there will always be differences when dealing with an overseas market.
He says: “It’s a very different clientele in Dubai. Clients there have different needs and they demand different solutions. However, the one consistent theme is that, unlike much of our competition, we have a banking licence.”
The personal touch
Gardner says his investment approach is very individual because, as a bank, “we’ve never had any products to sell clients”.
“There is no Arbuthnot Latham growth unit trust, for instance, or any Arbuthnot Latham structured products, so we’ve been quite different to other organisations from that point of view.
“As we have no products to sell clients we can sit on their side of the table and work with them as their entrée into the world of financial services.”
Gardner says he is completely unrestricted in being able to buy funds, structured products or bonds from any investment house or organisation.
“There’s nothing that is really out of bounds for us. We can look at the whole market and steer our clients towards the best solution.”
But not everything is rosy in the industry and Gardner believes much of the new regulation is burdensome for clients.
He says: “Regulation has many benefits in terms of improving the industry for the end buyer and the consumer. The aspirations of the FCA are totally valid in terms of trying to achieve competition and stability.”
However, he is concerned client choice has been restricted as a result of rules imposed across the industry. “Because we now all do much the same thing we are much less able to innovate or stand out as so much of our service is dictated to us by regulation.
“Some of the processes by which we have to manage assets are also dictated to us and, indeed, some of the assets we’re allowed to buy on behalf of retail clients are restricted. It is reducing choice for the client, which I think is a shame.”
Gardner would prefer an industry that puts the onus on educating the client, while giving them more flexibility of choice as to what sort of service they want and the type of paperwork they want to receive.
He says: “That’s one area I would urge regulators to look at, improving competition by giving regulated firms more choice in what they’re allowed to do and what their service offering could be to their clients.”
