Brewin Dolphin to slash MPS costs up to 27%

By retooling its MPS structure to a “more efficient and scalable” model, the wealth manager estimates it will save advisers’ clients about £3m per year.

Of its five MPS strategies, its global equity mandate will see the biggest reduction to its ongoing charges figure (OCF), which will fall from 69 basis points (bps) to 51bps.

After the new costs come to pass, its cautious mandate will become the cheapest portfolio on offer with an OCF of 50bps. Its balanced model, previously the cheapest mandate at 62bps, will now be offered at 52bps, as will the income mandate (previously 65bps).

The wealth manager’s riskiest mandate, the growth portfolio, will see a 20% reduction to its OCF, taking it from 69bps to 55bps.

The firm said it has been contemplating these cost cutting initiatives “for a few years now” and had finally reached the scale in order to do so.

“Brewin Dolphin’s MPS has reached a scale where our advisers’ clients can benefit from the reduced fees associated with large mandates rather than pooled retail funds,” explained Robin Beer, managing director of investment solutions and distribution at Brewin Dolphin.

“We’ve had this structure in our minds for a few years now, and once the assets rose to a level that would be attractive to third party managers, we’ve implemented it. As well as reducing the cost to our advisers’ clients, the new operational structure will ensure our investment decisions can continue to be implemented efficiently.”

The “core structure” of its five MPS strategies will now be comprised of four new “manager of manager funds,” including a UK equity, UK equity income, North American equity and global bonds vehicle.

Brewin Dolphin has appointed a handful of retail managers to run a portion of the four new funds. The list spans familiar heavyweights like Nick Train (UK equity), Neil Woodford (UK equity income), Baillie Gifford’s Tom Slater (North American equity) and some up and comers like Blake Hutchins of Investec Asset Management (UK equity income).

The funds have already been approved by the FCA and will launch in February 2018. They will be available on all 11 fund platforms currently offering Brewin’s MPS.

Global advisory firm Maitland will act as authorised corporate director (ACD) and administrator for the four funds.

Between February and May of this year, all the existing MPS assets will be transferred into the new structure as part of the normal monthly rebalancing schedule. The remainder of the MPS assets in overseas equities, property and absolute return products (roughly 40%) are unchanged and will continue to invest in third party retail funds, the firm has said.

The wealth manager will not take a fee from the new manager of manager funds, but will continue to be remunerated for the service at the same level, currently 0.3% + VAT.

Despite the changes the firm stressed it would be “business as usual” for advisers using its MPS models. There will be no changes to its investment process, with the research and asset allocation teams still providing relevant input. The five portfolios will continue to be re-balanced on a monthly basis.

The full list of managers appointed to run a portion of each fund at launch is included below.