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Wealth manager seeks acquisitions ahead of pension reforms

Consolidation within the wealth management industry will be driven by how well prepared firms are for the opportunities presented by next April’s at-retirement reforms, according to Brown Shipley’s head of private banking Hugh Titcomb.

Speaking to FTAdviser, he stated that the increased flexibility around how and when to take pension benefits increases the need for tailored wealth planning advice, but that a combination of regulatory and cost burden meant many smaller businesses would seek “economies of scale”.

Mr Titcomb said his firm was planning itself on “adding additional wealth planning resource during the course of 2015”, including acquisitions where the firm believes they can improve the client service offering or achieve enhanced ‘operational gearing’.

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On the need for advice in the wake of the retirement changes, he explained that in addition to the wider array of choices for would-be retirees, the removal of the 55 per cent ‘death tax’ on pension pots offers significant inter-generational inheritance tax planning opportunities

He added: “Changing demographics, with increased life expectancy, the continued demise of final salary pension schemes and the prospect of many individuals making a number of career changes throughout their working lives, further supports the need for quality advice.”

On the consolidation likely within the sector, Mr Titcomb continued: “The regulatory burden within the UK wealth management sector is undoubtedly significant and cost pressure on sector participants is increasing as a result.

“This is expected to drive further consolidation within the sector as businesses seek to achieve economies of scale.

“Further, the increased level of qualification required to operate within the sector following the Retail Distribution Review and increased transparency on pricing are welcomed as wealth management businesses strive to deliver a high quality service to their clients based on integrity and trust.”

The firm’s growth plans are not dependent on making acquisitions, according to Mr Titcomb, but it will consider opportunities where they can improve the client service offering or achieve enhanced operational gearing.

“Having a clear understanding of how a target business will complement an existing business on both operational and cultural levels is fundamental and undertaking thorough due diligence is key,” he explained.

To further demonstrate Brown Shipley’s commitment to the wealth planning space, Mr Titcomb cited the recent appointment of Roger Clark from Hoare & Co.

peter.walker@ft.com