The equity plan for investment managers will cost approximately £4.5m annually for the next five years, the company’s results for H1 revealed on Wednesday. Underlying profit before tax reached £48.3m, up 11.5% from £43.3m, despite assets under management remaining relatively flat at £39.9bn, up from £39.1bn in December 2017.
Peel Hunt reduced its forecasts for the wealth and asset manager for its FY19 forecasts and beyond due to the changes to incentives.
Group finance director Paul Stockton (pictured) told Portfolio Adviser departures from investment management had contributed to muted growth in H1 but denied this had been behind the company’s remuneration changes.
Stockton said: “The number one intention is to effectively allow more employees to participate in the business.”
“Over the last few years you’ve seen the participation of internal equity holders go down and down and reduce each year. This is effectively trying to rebalance that.”
The reduction in internal equity holders was due to employees retiring, he said. The size of the remuneration changes was proportionate to Rathbones’ overall size and current profitability, he added.
Manager exits
Rathbones announced plans to introduce the equity plan in February, before a number of staff exits, Stockton said.
He would not say the exact number of investment managers that had left the business over the period, describing it instead as a handful.
In December, Tim Eliot-Cohen defected to Close Brothers Asset Management to head up its high net worth business and was later joined by his former Rathbones colleagues Hugh Adlington, Andrew Hess and Andrew Mackintosh-Walker, whose departures were revealed in April.
In that same month, 7IM nabbed director Grant Hamilton to head up a new Jersey office, while Psigma poached investment director Daniel Faulkner for its Birmingham office.
Speirs & Jeffrey redundancies
While Rathbones had lost some investment managers over the reporting period, Stockton said they had increased their headcount by 60 over the last five years to approximately 250.
The Speirs & Jeffrey acquisition, which could reach up to £250m, will add a further 38 investment professionals.
But Stockton admitted the acquisition would result in redundancies.
“Inevitably we’re trying to get the best out of both businesses. That’s very much the spirit in which we’re engaging in this. We’ve talked about circa £6m of cost synergies so they will need to be achieved by a variety of means.
“One of those is that we will have two physical offices in Glasgow. There will be an opportunity to put those two together. It won’t just be people and roles, it will also be other areas.”
Stockton said while Speirs & Jeffrey is based in Scotland, decisions on headcount would be made across the company’s UK offices.
