Sanlam, the UK-South African wealth management group, has recruited a Close Brothers executive to launch a new service for ultra-wealthy Brits, joining an increasingly competitive market where some incumbents are struggling to grow revenues.
Sanlam has hired Penny Lovell, currently head of private clients at wealth manager Close Brothers, to lead its private office division, the firm said in a statement this morning. She will join in October and report to the overall head of the UK business, Jonathan Polin. Lovell will take the role of chief executive of the new unit and sit on the group’s executive committee.
Private offices specialise in wealth management services, such as financial and tax planning, as well as investment management for the very wealthiest individuals and their families. Sanlam’s new business is angling for clients with more than £1m in disposable assets.
Sanlam, established in 1918 in Johannesburg as an insurance company, has been expanding in UK wealth management in the past few years. In 2015 the firm recruited Polin, a colourful executive who previously led the mid-market UK wealth manager Ashcourt Rowan, to spearhead the effort. Sanlam’s UK arm now manages £12bn.
In 2014 the firm acquired boutique investment manager Four Capital Partners, with a plan to convert the firm into a domestic investment hub in London. However, several key executives have since departed, including chief executive Derrick Dunne, amid poor performance by the group’s core UK equity funds, according to a person familiar with the company.
Sanlam’s expansion efforts come as the UK wealth management market finds itself “at a crossroads”, according to a July report from competitor SEI.
It painted a picture of wealth managers struggling against narrowing profit margins and new threats from both low-cost roboadvisers and index-tracking funds. The report warned: “The future of the industry will be driven by a move towards inorganic growth and consolidation, as well as outsourcing”.
Consultants Scorpio Partnership, whose widely-followed annual report card on wealth managers was published earlier this week, found the global giants of the industry were struggling against the same trends.
It found wealth managers had made “concerted efforts” to cut their costs, leading to “strong profitability growth” – but this “masked the industry’s underlying struggle to improve revenues, with operating income rising just 0.04% on average”.
In a statement this morning, Sanlam’s Polin said he had retooled the firm to meet its challenges. He said: “I have spent the last two years reorganising and unifying the business to support the delivery of a vastly enhanced, client-focussed investment and service proposition.”