Yesterday saw the official re-launch of Cheviot Asset Management after 50 private client investment managers were poached last week from UBS...

Yesterday saw the official re-launch of Cheviot Asset Management after 50 private client investment managers were poached last week from UBS’ London operation. At the beginning of last week the handcuffs came off ex-Laing & Cruickshank staff who had benefited from the sale to the Swiss giant in April 2004. By the end of the week 50 of them had joined Michael Kerr-Dineen, their former chief executive in a quest to make 20-year old-investment management firm into “Britain’s premier independent private client asset management group”. According to insiders, Mr Kerr-Dineen had hired a table at Mirabelle restaurant just opposite the UBS office in Curzon Street where his ex-colleagues were based. Apparently, over a number of days, he invited his targets to his table to discuss their potential packages with him. Commenting on the departures from UBS one analyst told WealthBriefing "making such an acquisition which is very people dependent, buyers are well advised to establish rolling retention plans beyond the initial earn out to continuously incentivise client facing professionals to stay put". But for UBS it is not all doom and gloom. Market insiders say that most of the producers who have left mainly had clients well below the £1 million ($1.84 million) mark - not really UBS client territory. And will many clients risk moving over to what is in effect a star-up anyway? UBS are understood to have retained at least some of the old L&C CRMs who concentrate on the higher end clients for this very reason. Cheviot is backed by Martin Hughes’ Old Oak, which also separately manages successful hedge fund Toscafund. As well as Mr Kerr-Dineen, the new-look Cheviot boasts heavy-weight banker Sir George Mathewson, former chairman and chief executive of the Royal Bank of Scotland, who becomes chairman. The re-launch of Cheviot and its high stated aspirations are predicated on the new principals’ belief that there is a “glaring need in the market for an investment manager that combines the best of the old and the new”. It is also based upon the assumption that high producing private client relationship managers will join the organization based on the promise of ultra high commissions. Yesterday it was reported that CRMs at the new operation have been offered commission deals of 75 per cent of business they write less costs, although it was not clear whether these include allocated overheads. Moving from UBS is a large risk in itself, even though the rewards are potentially enormous. “Leaving the top brand for a virtually unknown brand is a huge gamble as is setting up a new business in the first place,” said Dudley Edmunds of headhunters Culliford Edmunds. “It strikes me that 75 per cent is a whopping and unsustainable model in anything other than the short-term and will have to be banded I would have thought,” another London-based consultant told WealthBriefing. “Merrill pay commission in bands after certain level of income have been achieved but the maximum is 45 per cent,” he said. Others in the market have expressed concern that with a compensation structure such as this client interests may be sacrificed in the pursuit of commission-based revenue.