All Aboard The Regional Wealth Train: More UK Perspectives

Jackie Bennion Deputy Editor 27 July 2021

All Aboard The Regional Wealth Train: More UK Perspectives

We continue our coverage of wealth management firms’ UK regional strategies. For this article, we spoke to HSBC Private Bank, Tilney Smith & Williamson, Rothschild, and Brown Shipley about their UK footprint and focus.

London and the South East have always been a magnet for wealth in the UK and a natural well for financial services skills and talent. But there are high levels of wealth and financial services acumen that have congregated around cities such as Edinburgh, Leeds and Manchester for well over a century now.

From Brown Shipley’s perspective, as part of pan-European wealth group Quintet, Cambridge and East Anglia are high on the list of recent additions to the UK’s wealth geography, boosted in recent years by rising house prices and the new science-based industries in the region. And we have already talked to UBS, Julius Baer and Kleinwort Hambros on their takes. And more banks are talking about their strategies.

“Any business that is under represented in these areas will miss out on opportunities," Calum Brewster, head of private banking and client solutions at Brown Shipley, said. "It is only through close ties in the regions, and a strong network of contacts that you attract clients such as new entrepreneurs to your business.”

The firm takes the approach that regional cities are the blood that pumps through the global city of London, and it flows both ways.

HSBC Private Bank’s regional home is Birmingham, again demonstrating the role that history plays in shaping the UK wealth picture. Its roots in the city stretch back to its purchase of the old Midland bank franchise. The group also has regional offices in Manchester and Leeds.

Peter Barriscale, managing director and business head for UK high net worth, told us that the bank situates private banking relationship managers in each of these cities for local face-to-face meetings and financial planning advice. They in turn report either into the London office or to regional teams.

The bank sees Manchester and Leeds as important Northern commercial hubs that are the fastest growing areas of wealth generation outside of London.

Although HSBC’s private banking division is only present in three regional cities, it uses its corporate and retail banking network to good effect.

“Many of our clients have banked locally with HSBC over many years. As their wealth grows and they transition into the private bank, they naturally expect our local advisors to have the same expertise and capabilities you would expect from a London-based private bank,” Barriscale said. 

Brown Shipley operates from eight UK regional offices in London, Manchester, Birmingham, Cambridge, Leeds, Edinburgh, Norwich and Nottingham.

“We are a little different to many of our peers in that we have historically been better known in the North West. However, we also have a significant footprint in London and increasingly in our other regional locations. Aside from this, we are aligning much more closely with our parent Quintet to offer propositions and services,” Brewster said.

Like many wealth managers, Brown Shipley's footprint has grown through acquisition. Its purchase of Hampton Dean financial planners in Nottingham added an East Midlands presence. The deal to buy wealth manager NW Brown & Co bolstered the firm’s access to growing wealth in Cambridge and Norwich. “We recognised this region as a hotbed of innovation and entrepreneurialism and the [NW Brown & Co] acquisition provides us with significant opportunities to grow here,” Brewster said.

Like others, the firm has made adjustments to increase hybrid and remote working. Much of last year was spent on office investment, including renovating the London office and moving into a purpose-built eco location in Nottingham, equipped with solar panels and car charger points to reflect broader longer-term changes, the firm said.

It also plans to move into 1 Spinningfields and become part of Manchester’s prestigious financial and retail hub.

For HSBC’s Barriscale, covering such a large geography from three regional office locations has challenged the bank to be more innovative, especially with time and travel. “We adopted flexible working a number of years ago but the pandemic has accelerated the use of technology for the more routine face-to-face interactions. Both our clients and our advisors have enjoyed the flexibility and convenience that video conferencing has given and we expect many of these efficiencies to continue now."

He says there are no plans to open new offices. “Our current footprint means we can service clients across the UK whilst also having the use of HSBC branches and corporate offices to conduct local client meetings where necessary." The only plan in private banking is moving the Manchester team to a new office in the city’s commercial hub to raise HSBC’s profile in the North West.

While Tilney Smith & Williamson may not have HSBC's retail or corporate banking footprint to rely on, it has developed one of the larger regional footprints, with over 30 offices across the UK, plus one in Dublin and Jersey. In some cases, it has more than one office in a city as a result of legacy businesses.

Tilney originated in Liverpool, and Smith & Williamson in Glasgow. The two merged last year.

“In total we are operating from 28 towns and cities and will gradually co-locate in those cities where the legacy businesses overlap, and where it makes sense to do so we will open locations where we see an opportunity to grow a local presence and acquire," managing director Jason Hollands said.

The main benefit of regional offices is “being close to our clients,” he said. “Wealth management is a relationship business and so being near to clients and visible within local communities is a real advantage. While we’ve adjusted well to remote working during the pandemic and the shift to virtual meetings, there is no doubt that some clients would still rather see their financial planner or wealth manager face to face. The way we engage with clients will be led by their preferences.” he said.

TSW organises UK coverage through a team of regional managing directors, each of which has a cluster of offices in their area, and those directors carry commercial accountability for regional initiatives.

With pretty comprehensive coverage across the UK already, the firm says there is no urge “that we must plant a flag here. "Any expansion would more likely be the result of bolt-on acquisitions as in if we found a really great business that happened to be in a town where we don’t currently have a presence,” Hollands said.

HSBC agrees that having advisors on the spot to deal with local clients is an essential part of why the private bank retains a regional footprint.

Having a global brand and services, combined with locally based advisor talent “makes for a compelling proposition”, Barriscale said. "In many cases the formula leads to personal recommendations. The same can be said for the relationships we have with local intermediaries, which are often built on local connections and networks."

HSBC has seen a significant rise in direct competition for markets outside London and the South East, but suggests there are challenges to operating sustainably, and with scale and profitably.

“Building the people and infrastructure needed to deliver wealth services to private clients is complex, which may limit the number of new entrants wishing to have a physical local presence. For those seeking to deliver advice from London, it is of course possible, but it is generally harder to forge as deep a relationship with clients without having experienced the local area, geography and people," Barriscale said.

The bank has seen strong growth across its UK business. This has been especially the case in the Midlands and North, "where we have seen the fastest growth in the UK Private Bank this year,” he said.

Earlier this year, Brown Shipley shifted its business focus up a gear by appointing Gordon Scott as head of strategic partnerships and entrepreneurs. The newly-created role was a bid to strike more professional partnerships with local entrepreneurs and deliver advice and business services to the current and next crop of wealth creators.  

The firm also hired Rupert Cecil as head of charities and philanthropy to broaden that aspect of the UK business.

When Tilney Smith & Williamson recently reviewed its regional footprint, it was to look for business overlap and whether certain teams could work from a single location. As a result, the firm recently combined its teams in Belfast and Bristol.

The firm is another convinced of the power of on-the-ground visibility, and questions whether the same level of service could be achieved from a single location, such as London.

“Word of mouth client referrals, networking and local events are all important sources of new clients, including professional intermediaries. Our colleagues in regions are often highly immersed in their communities, undertaking charitable work and local sponsorships,” Hollands said.

TSW sees opportunities for growth, especially in regions that are underserved. “If you are a wealthy individual based in Newcastle, leading a busy life, you don’t want to be dealing with an advisor located hundreds of miles away. When a firm has an office in your city or town, it is a vote of confidence in your area,” Hollands added.

As a firm with a large UK footprint, does it view the government’s so-called “levelling up” agenda as positive for regional wealth?

“I think over time it will, but also the decision by many businesses to dispense with the need to spend five days in the office is opening up the prospect for many well-paid professionals moving outside of the cities into the countryside and towns. That should also help wealth better disperse around the UK and reinforces the benefits of having a network of office locations beyond the M25,” Hollands said.  

Brown Shipley's Brewster says that his firm also regularly reviews its UK reach and suggested that the next natural place for the firm to open is in the South West.

“For us, it’s about having the right mix of offices in locations that are beneficial to clients, prospects and colleagues,” Brewster said.

He agrees with others that having strong regional coverage can reflect well on a wealth manager’s net promotor score.
“We have an average NPS of 60 against an industry average of 46. Our client feedback to date hasn’t specifically indicated that this is due to us having a regional office footprint, rather it’s around the fantastic service levels and understanding they have with their client advisor," he said.

It is less about where you are than who you are, in his view.

“Clients don’t necessarily think about a service being regional or in London, rather they think about where they are getting the best service, advice and the best wealth management relationship," Brewster said.

For Rothschild, the choice of regional locations has developed organically, "where we’ve identified a potential advantage, good people, and built on our existing Global Advisory presence and reputation." The firm operates from four locations in London, Manchester, Guernsey, and recently opened in Birmingham.

The main benefits of a regional footprint is tapping into a genuine understanding of local family and business needs, Rothschild said, and the networking and referral opportunities that being on the ground provides.

“The way in which wealth is created has changed – and with that the way we, as an industry and a firm, need to operate. We need diversity across all areas, and that includes not being London and South East-centric,” Rothschild said.

The firm “tends not to ‘segment’" in its regional approach and "make assumptions about people depending on arbitrary demographic criteria. However, we have found that having a local connection works particularly well for entrepreneurs and family-owned businesses, where relationships and partnerships are often most valued.”

Rothschild agrees that a regional presence is important to foster those true local business-community connections but believes that wealth managers don’t necessarily need to be ‘next door’ to clients.

“While clients for our Manchester business are primarily based all over the North of England, our commitment to building the right team around the client - matching experience, knowledge and personality - means that one of the largest clients for our Manchester office (in a joint venture with London colleagues) is actually based on the South Coast," the firm added.

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