Aside from the reams of website coverage and magazine pages dedicated to the subject(s) and some long shifts for the individuals on the communications side of the business, however, what matters most to wealth managers about these developments?
The talks between Cazenove and Schroders had clearly been underway for some time when a leak on Friday 22 March meant the press had it before they were supposed to, even if only by a couple of days (by Monday 25 March the bid was formally announced).
Securing the private banking and wealth management divisions of Cazenove seems to have been the main driver for the acquisition, even if the added artillery of pan-European equity fund managers comes at a handy time given Buxton’s departure.
Speculation that Cazenove’s Julie Dean would take on Buxton’s funds when she joins Schroders has been dismissed by Cazenove, which said she has a very different management style to Buxton’s mainly large-cap buy-and-hold process.
Distraction tactics
Happily for Schroders then, the news has come along just in time to distract investors from Buxton’s departure even though as yet no replacement has been announced, and no Cazenove manager is set to fill his shoes.
A breakdown of the Cazenove deal shows the firm will contribute vastly more assets to Schroders’ private client business than it will to its asset management arm – £12.1bn versus £5.1bn – and the private bank will keep Cazenove branding while the funds business will in due course lose theirs.
This illustrates quite clearly the modus operandi behind the acquisition, particularly as Schroders’ head of business development in the private client division left back in December to head up Jupiter’s offering in this space.
The deal follows Standard Life’s acquisition of Newton’s private client business for £83.5m, which increased its discretionary assets threefold to around £4.6bn.
Bigger fish, small pond
Consolidation has been one of the key themes commentators have told us to watch out for post-RDR. Consolidation of funds and platforms, networks acquiring IFA businesses, and now fund managers acquiring private banks.
Of the three, fund groups bolstering their wealth management capabilities have the most potential to damage Portfolio Adviser readers.
Cazenove’s private banking operation, already a significant force in the sector, will now have the might of Schroders behind it – a scary thought for smaller wealth managers who view Brooks MacDonald and Brewin Dolphin as competition enough.
On top of this Cazenove’s head of multi-manager Marcus Brookes will move over to Schroders, along with his team and the rest of the fund managers.
Back in February 2011 when Andrew Yeadon departed Schroders, managing director of UK intermediary Robin Stoakley said “there was no longer a need for a head of multi-manager at the firm following a merger of its funds of funds capabilities with Johanna Kyrklund’s multi-asset team”.
Fast forward two years and Stoakley is very excited about Brookes and team joining Schroders and reporting to head of portfolio solutions John McLaughlin.
Nibbling both ends
“Where you are buying out what I would consider to be a world class multi-manager under Marcus and Robin [Macdonald] we will want to make sure they are allowed to operate as effectively as they can. So they will be managing a specialist multi-manager unit in the multi-asset team.
“For me it is one of the most exciting things about this transaction because it gives us a top-notch intermediary focused multi-manager.”
For Stoakley to have changed his mind on multi-manager he must see real opportunity to gather assets.
An top notch private client business on one side and a well-respected multi-manager range on the other – from your HNW clients to your outsourcing intermediary clients – is there much of your market Schroders isn’t in?
I leave you with this sobering comment from the recommended offer document for Cazenove: "Schroders will have a compelling service proposition covering investment management, financial planning, deposit-taking and lending services."
Pretty much everything then…
