Last week, the firm took its first steps outside Europe when it stuck its flag in the grounds of South Africa.

AIM-listed European Wealth is a relatively new player in the game of wealth management. The UK-headquartered wealth manager first set foot in the ring in 2010, and has since grown the assets it controls to £1.6 billion ($2 billion).

Fast-forward seven years, and the firm last week opened its first office in South Africa to better serve clients in the region that were acquired from Towry Asset Management last year in a £125 million deal. The new office, spearheaded by former Savoy Asset Management director Paul Heber, adds to European Wealth's nine other offices, seven of which are in the UK, one in Gibraltar and one in Zurich, Switzerland. 

As Britain's divorce from the European Union looms, and the geopolitical flightpath faces bouts of turbulence, this news service sat down with European Wealth's founder and chief executive John Morton, and fixed interest director Nigel Davies to discuss Brexit, their stance on digital advice and the firm's first steps outside of Europe.

Morton started his financial services career in the City back in 1979 with Hill Samuel, now a wholly-owned subsidiary of Lloyds' offshore private banking unit, in a back-office role he described as “far from exotic”. 

“I couldn't fit in with the institutional style of the City in those days,” he said, which resulted in him pursuing a place within the private client space. 

Although Morton has been involved in the private client sector since the early days of his career, he spent a stint with Aberdeen Asset Management where his focus was on institutional clients before he founded European Wealth in 2010. 

“For me, this was a great time to start a business,” Morton said. “Minimum fees were going up, and there were clients being orphaned because they were treated as numbers not individuals. The most important thing to me is trust, as clients build confidence by knowing who they're dealing with. That's where we felt we could make our mark relatively quickly.”

Davies is very much the opposite of Morton, as he has spent the majority of his career focusing his attention on institutional clients. He began his career in stockbroking and then spent a vast chunk of his 35-year career working within the building society sector, which he described as “dying on its feet”.  Now, he specialises in fixed-income and treasury management.

Marry the qualities possessed by two veterans of different areas of money management, and one would assume the outcome is a business model destined to succeed. 

European Wealth focuses mainly on two categories of money management: institutional and private client. However, the term wealth manager is somewhat loosely-applied to the firm, as there is no official minimum amount of money it will manage. With this being said, the average portfolio size of a private client hovers around £350,000, and both Morton and Davies advise a minimum investment of £50,000.

“We deliberately have a broadly-spread business,” said Morton. “We try to deconstruct wealth management into its constituent parts, which are financial planning, investment management and execution as members of the Stock Exchange. We are happy to carry out any service, because once we demonstrate what we can do, it is very easy for clients to take on another service,” he said.

“Get them on a hook and you can draw them in,” he continued.

Brexit

With Brexit fast approaching, some may see Morton's decision to name the business European Wealth as regrettable, to say the least. However, he does not seem shaken by the political tremors of recent times. 

“Brexit or no Brexit, people will still need their wealth managed,” said Morton. “Will we change as a business? Probably not. I don't see why we should at this stage. Although, some will say European Wealth is probably not the greatest name to have!”

European Wealth's investment management business looks after around 1,700 clients' assets, whereas the institutional side manages between £500 million and £600 million for approximately 30 clients.

“As far as client assets are concerned, it is going to be a long and slow divorce. No one at this stage can be certain about anything, but there will undoubtedly be lots of uncertainty on the way,” said Morton.

But for Davies, whose team looks after three or four of the UK's top-10 universities' wealth, Brexit could present some hurdles.

“Funding is provided to the university sector by the EU in the form of grants for research etcetera, so there must be a Brexit question mark over that going forward,” said Davies.

Last week, the firm stepped outside Europe for the first time when it stuck its flag in the ground of Johannesburg, South Africa. Morton says it will be “in the summer” before it is business as usual for the new office in South Africa's largest city, as there is a lot of heavy lifting still to do including transferring assets and staff, and repapering clients.

“Not being a massive business, we haven't got as many resources,” he admitted. 

Regardless of Brexit, new regulations and EU directives, such as MiFID II, remain on the horizon, and therefore compliance remains an important aspect to European Wealth. Since its inception, the firm has received no slaps on the wrist from its primary watchdog, the UK's Financial Conduct Authority, and Morton intends to keep it this way. 

“We can't afford to make stupid mistakes,” said Morton. “We interact regularly with the FCA and have so far had no regulatory issues or fines.”

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Digital Advice

European Wealth has an in-house compliance team of seven members, accounting for 7 per cent of its 100-strong workforce. To minimise compliance risk, and to avoid straying from its core principles of trust and hands-on dealings, the firm has actively chosen not to go down the robo-advisor route.

“We have made a positive decision not to run down the robo-advisor road,” said Morton. “Also, I feel the compliance issues are high. It doesn't align with our core business, and I feel it is wrong to stray from your core expertise. Dealing with clients face-to-face is our priority, and if we lose this, we would suffer,” he said.

Admittedly, Morton is an “older generation”, and although “there certainly is a place for robo-advice, European Wealth was not built for that marketplace,” he said. “It would be dangerous if we went into the that space.”

Despite his wariness of the digital advice space, Morton assured us that his firm is comfortable in its sector, and that its performance speaks for itself while drawing in new business.

“Our biggest advertisement is performance,” he said. “Through performance and word of mouth, you become a preferred supplier within certain sectors. I'd like to think we aren't brash and arrogant, but rather quiet and confident. It goes back to selling clients trust and services – this isn't a burden, it's just how it is.

“We like to do what we intend to do, rather than shout about it and then not deliver.”

When asked where he sees European Wealth being in five to 10 years' time, Morton said that however he answered, he would be wrong. Nonetheless, he still gave it a go.

“I genuinely think we have the building blocks in place to quietly build a fairly significant business, as long as we stick to our core principles,” he said. “Get any of those wrong, and the whole thing starts to crumble.

“Internationally speaking, we are very optimistic. One has to accept that the world's wealth is moving East, but that doesn't mean we should all run off to China. I think we have a good approach to things as we never say never to anything.”