Custody and consolidated reporting provider Multrees has only been around for four years but has posted 30 per cent annual growth rates since then - and remains confident about demand ahead.

Custody and consolidated reporting services will not set the pulse racing compared with the ploys of a hedge fund guru or trading star, but these businesses could not operate without good backup. And the field of custody and reporting has seen as much change as the more visible side of the business in the front line. One such business is Multrees, a UK-based firm that offers custody and reporting for wealth managers and private investment offices. It has logged rapid growth and is a relative newcomer (founded in 2010) to a field to some extent dominated by the big-hitters such as BNY Mellon and Northern Trust in the US and their banking counterparts elsewhere. In June, the firm, as reported here, launched an online portal for wealth management firms. So what makes Multrees different? This publication recently spoke to its chief executive, and one of its founders, Chris Fisher.

Fisher spent nearly 20 years in asset servicing and wealth management businesses, including some big-name firms such as UBS and Brown Brothers Harriman, the venerable US firm. His colleagues include Clive Stelfox, head of its Edinburgh office, and Oli Prendergast. Stelfox has worked at places including Barclays Wealth, Gerrard Investment Management and its predecessor, Grieg Middleton. Prendergast has worked at the likes of UBS and most recently, was a director at Credit Suisse Private Banking.

Q&A
In general, what is the best way to describe Multrees and what it does?
A provider of custody and consolidated reporting services for wealth managers and private investment offices.

What is the unique value proposition of the business? What are its differentiators and why?
In a financial services world where outsourcing means standardisation, Multrees offers its client firms a flexible shared service model to help them differentiate their propositions.

What is its geographic reach in terms of where clients come from? Any future ambitions?
Client firms are based in the UK, but in turn they have an international customer base. It is highly likely that as our client firms expand their operations into other jurisdictions, Multrees will extend its servicing capability in order to continue to support their activities.

How does Multrees see the market evolving? What are the challenges driving its business?
Client firms are challenged by regulation, the need to compete for expensive investment personnel, and the growth in competition in the wealth sector. The Multrees model of using core back and middle office flexibility to drive proposition differentiation appeals strongly to the new emerging class of differentiated investment firms.

How has business performance been in terms of revenues and profitability?
With very modest outlay on business development in the early years, Multrees has seen consistent annualised growth of 30 per cent.

Why did you feel a need to start this business? What was the state of the market when it was launched? How does it look today?
The business opportunity emerged post financial crisis when it became clear that many investment firms were disenchanted with the service changes being imposed on them by large non-specialist organisations, such as major private banks.

The amount of regulation in the industry is a constant talking point - how big a factor is it in driving your business and how big a hindrance can it also be? Are there specific regulations you would mention in particular?
The increasing burden of regulation on the wealth sector is a strong factor influencing investment firms to talk to Multrees. In particular, the volume of regulation affecting customer activities, such as suitability, is forcing wealth managers to assess the cost of complying with regulation. While CASS, for example, affects customer outcomes, it does not affect a wealth manager’s proposition.

How do you attract clients (intermediaries, word of mouth, adverts, etc) ?
Multrees has a focused client development strategy based on adding value to a wealth manager’s proposition.  The target market for our services is, we think, reasonably small. Therefore, we rely on a small amount of business development resource and word of mouth referrals.

What is your biggest concern about the state of the industry you are working in? What fills you with the most optimism?
Our biggest concern is that the burden of regulation continues to grow and ends up inhibiting innovative and entrepreneurial activity in the wealth sector. Conversely, our optimism is driven by the clear determination of a new breed of wealth manager to innovate and improve customer outcomes.

From your vantage point, what is the one issue that you think wealth managers need to improve upon, and why?
The industry, as a whole, has been unsuccessful at setting customer expectations and therefore has not positively influenced customer outcomes. We see this changing as a new breed of wealth manager, with a refreshingly new ethos, emerges into the market.