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EXCLUSIVE: Duncan Lawrie Outlines Ambitious Growth Plans
Wendy Spires
30 November 2012
Duncan Lawrie, the London-headquartered private bank, has embarked on a strategic plan to double its book of investment and banking clients over the next five years. Here, managing director Matthew Parden explains why he thinks his firm has what it takes to meet this ambitious target. Duncan Lawrie’s Georgian headquarters nestle in London’s Belgravia district – a fittingly “old school” location for a private bank which predicates its offering on old-fashioned, relationship-based banking. The area’s understated elegance also befits a bank which - compared to many of its peers - has kept a relatively low profile until quite recently. Over the past year or so Duncan Lawrie has become much more “visible”, commentating regularly on industry trends in the trade press for example, and now seems to be coming out of the shadows. This media push forms part of a five-year growth plan to double the bank’s client roster – an ambitious target, but one which is eminently achievable, according to managing director Matthew Parden. Speaking to WealthBriefing in a recent interview, Parden was clear on what his bank’s strengths are in what remains a highly disjointed market in the UK: transparency, a focus on core values such as personal service, and financial stability. With regards transparency, Duncan Lawrie is far more upfront than many private banks when it comes to its fees: it charges a flat 1 per cent of assets with an additional charge of 0.5 per cent over the first million of assets. In contrast to the stance taken by many firms, Parden is also refreshingly candid about the client-relationship manager ratio at Duncan Lawrie, which is 150:1 (this equates to 4,500 clients served by around 30 relationship managers, running some £700 million (around $1.1 billion) in assets). In terms of its service ethos, Duncan Lawrie operates along tripartite lines – offering private banking, investment management and financial planning - and this means that clients might well be served by a team of three, said Parden. But clients will naturally have a lead relationship manager, he continued, explaining that his bank is happy for individual members of staff to “own” clients - a contrast to the team banking tactics increasingly favoured by many large institutions scared of clients following departing bankers. Turning to the issue of balance sheet strength, Parden believes that Duncan Lawrie appeals to clients as “a safe pair of hands” – stability lingering as a top client concern following the weaknesses exposed within many institutions by the financial crisis. Duncan Lawrie in fact boasts a BIS Core Tier 1 capital ratio of 38 per cent – a figure which Parden agrees is indeed “Swiss style”, referring to the higher cash buffers which many of the venerable Swiss houses tend to prefer. Shunning the racier lending activities which got so many institutions into trouble in recent years, Duncan Lawrie operates under strict self-imposed lending restrictions. “We only lend up to our share capital and reserves, which pretty much means that it’s the shareholder’s capital which gets lent. This means we’re not running high loan to deposit ratios and that means that the type of lending we do provide is short term - it’s flexible, it’s bridging finance,” said Parden. “If our existing clients are looking for short-term ‘bridgers’ – they may be entrepreneurial, they may be property-minded – we can facilitate and service that kind of client. What we don’t do is twenty-five year mortgages.” The tea trade Talk of Duncan Lawrie’s shareholder yields some interesting facts: Duncan Lawrie is part of the Camellia Group, a diversified agricultural holding company which is in fact the second largest independent tea producer in the world (producing 90 million kilos of tea annually). Duncan Lawrie’s name also has its roots in tea, deriving from those of two tea traders - Alex Lawrie and Walter Duncan – who went to India to trade tea in the 1860s. Over the years their businesses became merchants houses facilitating trade and the group expanded and diversified over the years until Duncan Lawrie was formed in 1971. According to Parden, Duncan Lawrie owes a lot to the benevolence of its shareholder, since Camellia “takes a long-term view to everything”. While growth is of course encouraged, the bank is not asked to do anything which might compromise its core principles, which in Parden’s words are “traditional, personal service-led banking.” “We’re supported and allowed to grow over the long term. We’re not being pressurised by short term profits and targets, or short term returns on capital (the 15 per cent plus you may have seen before the crisis). We’re not pressured to produce those returns - we’re asked and expected to grow the business over the long term,” said Parden. Keeping old talent, attracting new To help fulfill its ambition of doubling its book of investment management and banking clients over five years, Duncan Lawrie is aiming to double its roster of relationship managers (equivalent to a 25 per cent rise in overall headcount). Here, Parden says that he is confident of his bank’s ability to garner new talent, saying, “it’s actually quite easy for us to attract people - we’re a kind organisation and the culture of the organisation appeals to someone wanting something different.” (Here we could note that Duncan Lawrie markets itself under the slogan “the human face of banking” – an adjective not often seen in marketing literature in this space). But while bringing in new blood is a priority, Parden is also clearly proud of his bank’s ability to keep hold of its staff, reporting that the average length of service at Duncan Lawrie is 18 years. (The issue of length of service takes on additional importance when we consider that Weatherill Executive Consulting’s Value of Trust Report recently found that it takes at least six years for wealth managers to gain the status of a “trusted advisor”, and yet 56 per cent of wealth managers have been at their organisation for five years or less). What Parden is aiming for with his staff is a blend of old and new as the bank seeks to broaden its client base. “We pride ourselves on the length of service our relationship managers have, but at the same time we’re looking to bring in people from outside as well,” he said, “I think it’s important to have a mix.” Regional expansion A good illustration of this blending of old and new faces is Duncan Lawrie’s appointment of two regional directors for southeast and southwest regions of the UK – roles which were created to cement the bank’s commitment to its regional expansion. In July Dina Henry was named regional director for the southeast and Kent, while a month before Jeff Durant was named regional director for Bristol and the southwest. Henry has been with the bank 30 years, having started her career there in banking operations and foreign currency dealing. Regarded by Parden as “one of our greatest relationship managers”, she has been looking after the bank’s clients in the southeast and Kent in particular for eight years now. Durant, meanwhile, was previously a senior partner at Clydesdale Bank, where he oversaw a Bristol-based team of corporate relationship managers. Duncan Lawrie is among a host of wealth managers currently eyeing expansion in the UK regions, but the bank actually began the process of its regional build-out several years ago. The bank launched an office in Bristol in the southwest of the UK in December 2008 – a move which followed the full integration of Hill Martin, the strategic financial planning, employee benefit and asset management firm which the bank acquired in 2006. (The year before Duncan Lawrie acquired the London-based investment manager Douglas Deakin Young). The Wrotham, Kent office, meanwhile, has been in existence for nine years now; it started primarily as an operational hub but then evolved as a “natural” focus for regional expansion due the bank having a client base and “good people” there already, said Parden. The advent of the financial crisis caused Duncan Lawrie, like many of its peers, to hunker down to weather the storm, but now that it has passed the bank is now ready again to focus on its regional businesses, explained Parden. By way of example, the bank has bought new larger premises in Bristol’s Queen’s Square and charged Durant with growing the private banking team for the southwestern region. (The Bristol office currently has a headcount of ten, while the Wrotham office has 25 staff. Its Isle of Man subsidiary – which has a separate banking licence - has 30 employees). So is Duncan Lawrie looking to make a further acquisition, perhaps to open up another region? The firm is concentrating on continuing to build its presence in the southeast and southwest region of the UK and so is not looking at other regions at present, said Parden. On the question of acquisitions more broadly, Parden is ambivalent, saying that while the bank is not actively in the market it “will look at attractive opportunities”. The availability of such opportunities is however quite limited due to the prerequisite that any target has be a perfect cultural fit, he continued. “We’re not looking for worldwide domination…we’re looking to grow on a gradual, long-term basis and we’re starting with these two regional offices,” Parden said. Broadening the client base Another of Parden’s aims is to lower the average age of the bank’s clients, which currently stands at 58, and get clients on board at an earlier stage in their “wealth journey”. As such, Parden envisages clients’ relationships with the bank to evolve as their wealth profile does. “We’re providing an integrated service which looks at life-stage planning. So if you’re accumulating wealth you’re likely to be using our banking and financial advisory services with smaller portfolios,” he said. “We then want to make sure that as clients accumulate and get to be ‘accumulated’ they then move over into our discretionary investment management services. It’s effectively a ‘cradle to grave’ offering.” As well as lowering the average age of its clients, Duncan Lawrie is also clearly targeting female clients – not through explicitly marketing to them however, but rather through the launch of “female-friendly” services. In 2008 the bank launched a rather unusual funding service targeting those who are the weaker financial partner in a HNW divorce scenario. In many cases such individuals can expect to have significant wealth after the split because of the “reasonable division of assets” protocol, but often they lack ready funds for lawyers’ fees. As part of the service the bank has focused on building “very close links” with the UK’s family law firms, Parden said. This allows the bank to stay on top of the latest developments in divorce litigation and also to lend its financial expertise – it even provides expert witnesses to help lawyers fight the corner of their clients more effectively. Of course, it is essential that that both parties in a divorce have equal access to highly-skilled counsel since in acrimonious cases those who stand to lose significant assets in a split can often deploy quite creative structures to shield their wealth. Helping such financially weaker partners at what can be a particularly distressing time no doubt earns Duncan Lawrie a huge amount of goodwill and is presumably a great source of new clients. While it is not only women who might need such a service, nor is the bank marketing it specifically to women, Parden agrees that it is particularly “female friendly”. (Although women aren’t always the weaker financial partner in a HNW divorce, it’s probably still fair to say that this is still usually the case - the landmark Radmacher case of 2010 being one recent high-profile exception). But this isn’t the end of Duncan Lawrie’s female-friendly services since earlier this year the bank launched a maternity leave loan service to help female entrepreneurs. In short, clients are offered special terms on their existing loan facilities - the suspension of interest payments during their pregnancy and after giving birth (for up to a year) - to help ease the financial pressures on their business until they are back in a full-time capacity. Progressively, the bank will also consider offering the same terms when it is the father who will be taking time off to look after a child while his partner returns straight to work. In another move signalling its female-friendliness, in June of this year Duncan Lawrie appointed Jane Parry as its first female board member. Parry, director of head of marketing and new business development, has been with the bank since May 2011 (before this she worked for the wealth division of Skandia International). Higher-visibility In short, Duncan Lawrie is making moves in a number of areas to up its visibility and drive its five-year growth plan. The bank has become an outspoken proponent of relationship-driven private banking in the trade press, for example. Here, Parden points to the results of a YouGov survey of 1,000 high net worth individuals commissioned by the bank, which revealed that 70 per cent of those surveyed were disillusioned with the banking sector and that 75 per cent wanted a more personalised service. “It’s undoubtedly true that there’s a desire to move back to basics and back to traditional banking,” he said. The phrase “back-to-basics” is in fact increasingly coming up in WealthBriefing’s conversations with senior industry executives (see for example, our recent interview with Metro Bank’s private banking head), and so it would seem that Duncan Lawrie has indeed got its finger on the pulse of current industry and client sentiment. Only time will tell if the bank’s strategy will pay off and help it meet its five-year growth targets – this publication will be keeping a close eye on Duncan Lawrie’s progress going forward.