Terry Smith outlines succession plans

Terry Smith outlines succession plans
Terry Smith, founder of Fundsmith

Fundsmith chief executive Terry Smith has outlined potential steps of succession at the business, naming Julian Robins, current head of research, as his potential successor.

Since founding the £33bn AUM company in 2010, Smith has served as chief executive as well as chief investment officer, but described Robins as the “first line of defence” and a natural replacement, referring to him as “the Prince Charles of Fundsmith”.

Speaking at yesterday's annual shareholder meeting, Smith did not suggest that he is considering retiring, but confirmed to investors that there was a succession plan in place.

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However, he did not go as far as to confirm any definitive moves, and said there were other individuals in the firm who may end up in the top job.

The manager began by saying he “disputes whether [his departure] is of great importance to the long-term investor”, given what he sees as the strengths of the companies he holds.

But he added: “As a result of further recruitment at the firm, and new products we’ve launched at the firm, [we] have taken on new colleagues in the last few years. I would say some of those colleagues have certainly shown the sort of form that…might make them worthy successors in due course.” Smith said.

Smith owns a controlling stake in Fundsmith, but he said there were plans in place to reduce that stake, whilst offering the opportunity to others in the firm to increase their share, retaining overall control of the business within the top-tier management.

Speaking at the presentation the veteran fund manager said: “I have a plan… where I want to take the majority of what I own in the firm, and pass it on to other people in the firm in due course".

Robins started his career with the stockbroking firm EB Savory Milln in 1984 and from 1987 to 1999, worked for BZW. In 1999 he was one of the founders of Collins Stewart’s New York office. 

In 2000 Smith became chief executive of Collins Stewart and led the management buy-out of the firm, which was floated on the London Stock Exchange five months later.

Smith said that he has no concerns regarding the suitability of Robins running the London based firm, saying: “I’ve got a horrible thought that he’ll be better at it”.

He added: “But the good news is, unless my views on the afterlife are dramatically wrong, I won’t be here to see it.

"The standing joke at the moment is that Julian may become the Prince Charles of Fundsmith," Smith added, alluding to the possibly that he may remain in the role for some time, with another member of the team ultimately taking over.

On its website, the firm says that it is “structured to survive Terry Smith’s demise.”

At the meeting, Smith was fielded a range of questions, including his thoughts on Bitcoin, to which he responded that people are “speculating, not investing.”