Tilney is set to rival Brewin Dolphin and Rathbones for assets under management as it confirms it is in talks to merge with Smith & Williamson.
The wealth manager has £24bn AUM while Smith & Williamson has £21bn. If the deal goes through, Tilney’s combined assets of £45bn would make it a large competitor to Brewin and Rathbone who have £44bn and £49bn AUM each.
“Potentially this could introduce more competition for these two companies that produce reliable good margins,” according to a Charlton Illingworth blog, published on Monday morning.
CWC Research managing director Clive Waller said the merger represents a scale game. “Most costs are fixed, so the key is to manage loads of money.”
Waller added that Brooks Macdonald and Charles Stanley would also be competing with the merged wealth manager in the AUM league tables. However, Brooks had just £13.2bn AUM at June 2019 and Charles Stanley had £24.1bn FUMA in its full year results.
“Their challenge is the drift away from AUM charging and the drift to passive investments. Arguably, MPSs are bit of intellectual property and don’t justify AUM charging.”
The deal
The potential merger between the two rivals could see Tilney expand its offering to include tax advisory services.
If it deal goes ahead, the combined business would have 250 financial planners, 240 investment managers and over 100 partners in professional services, according to the Financial Times.
In a statement responding to media speculation, the board of Tilney said: “These discussions are ongoing and there can be no certainty that a transaction will proceed. A further announcement will be made as and when appropriate.”
The talks first began in August 2017 when Rathbones confirmed a potential merger with Smith & Williamson. After this was revealed, Tilney submitted a last-minute bid for rival Smith & Williamson to derail its imminent merger with Rathbones.
Rathbones confirmed just under two weeks later that talks had collapsed.
Tilney snapped up two asset managers Ingenious and Towry in 2016.
