Brewin Dolphin : to reduce the cost of its Managed Portfolio Service

17 January 2018

Annual Cost Savings of c. £3m a year to its advisers' clients

Wealth manager Brewin Dolphin will reduce the cost of its highly popular Managed Portfolio Service (MPS) by changing its structure to make it more efficient and scalable. The enhancements will take effect as part of a phased transfer between February and May 2018.

In future, for the transferring assets, Brewin Dolphin's MPS will invest directly with chosen third party managers via segregated mandates instead of via their retail funds. Brewin Dolphin is leveraging its economies of scale to reduce the third-party manager charges, and pass that benefit on to the advisers' underlying clients.

c. £3m cost saving to underlying clients as cost of investing drops

Brewin Dolphin will pass on all cost savings to advisers' clients as the new approach will reduce the Ongoing Charges Figure (OCF) of the underlying fund holdings. For example, the indicative underlying cost on a balanced MPS portfolio will fall by some 17% from the current cost at 62 basis points (bps) to 52 bps afterwards. The enhancement to the service will lead to client cost savings of around £3m each year in aggregate.

Indicative underlying fund costs for each MPS model before and after transition are:

Additionally, transaction costs should decrease due to the lower portfolio turnover. For example, if Brewin Dolphin decides to change a manager, there is no need to sell down and reinvest the proceeds in a new fund. The management of the assets within the funds can simply be taken up by a new manager.

The structure has also been created so that as scale builds in the service, further savings are possible and will be passed on to the underlying clients. This ensures that clients are the beneficiaries of savings now and in the future. Brewin Dolphin will take no fee from the new manager of manager funds but will continue to be remunerated for the service at the same level, currently 0.30%+VAT.

Robin Beer, managing director of investment solutions and distribution at Brewin Dolphin said:

'Brewin Dolphin's MPS has reached a scale where our advisers' clients can benefit from the reduced fees associated with large mandates rather than pooled retail funds. We've had this structure in our minds for a few years now, and once the assets rose to a level that would be attractive to third party managers, we've implemented it.

'As well as reducing the cost to our advisers' clients, the new operational structure will ensure our investment decisions can continue to be implemented efficiently.

'Our intermediary business has gone from strength to strength over recent years and that's a testament to a number of factors, including our network of business development managers around the country, our fantastic relationships with advisers and platforms, and our expanding risk profiles used to assist advisers.

'We are committed to transparency and advisers will continue to see the exact percentages managed either via the segregated mandate or the other third-party funds used within the models.'

New structure and transfer

At the core of the new structure will be four new 'manager of manager funds' that will allocate a proportion of each fund across a number of third-party managers. Many of the managers already appear in the MPS models. However, we have taken this opportunity to bring some new names on board.

Brewin Dolphin has appointed Maitland as the ACD (Authorised Corporate Director) and fund administrator for the new funds which will provide UK Equity, UK Equity Income, North American Equity, and Global Bond strategies across the four separate funds. Maitland is a global advisory and fund administration provider with £200 billion assets under administration.

The funds are approved by the FCA and will launch in February 2018.

A carefully orchestrated transition plan will see MPS assets transfer into the new structure between February and May 2018, using the normal monthly re-balancing schedule. The funds will be available on all 11 fund platforms currently offering the MPS service.

Approximately 40 per cent of the remaining MPS assets (some overseas equities, property and absolute return) are unchanged and will continue to invest in third party retail funds.

Business as usual for advisers using MPS

There is no change to the investment process that has driven the success of MPS. Brewin Dolphin's in-house research department still provides the relevant oversight while Brewin Dolphin's Asset Allocation Committee will continue to meet monthly and set the asset allocation for the models. The re-balancing of the five portfolios will continue monthly across all platforms.

Brewin Dolphin is pleased to announce the appointment of the following managers to run a portion of each fund at launch.

Manager selection is subject to change and regular review as part of the normal rigorous fund research process.
NOTES TO EDITORS:

Key information about MPS:

MPS is popular with advisers and their clients. Launched in 2010, MPS has grown from £500m in September 2015 to over £2,300m in in September 2017. More than 1,000 advice firms have signed up to use MPS, more than 200 in the last financial year alone.

• MPS is available on five risk models - Cautious, Income, Balanced, Growth, Global Equity
• Available on 11 platforms - Aegon, Ascentric, Aviva, Fusion, James Hay, Novia, Nucleus, Standard Life, Standard Life Elevate, Transact and Zurich
• Minimum investment - £2,000 lump sum / £100 per month regular saving
• 0.3% plus VAT clean fee structure
• Competitive TERs on underlying holdings
• Monthly rebalancing
• No dealing charges on Aegon, Aviva, Axa Elevate, Fusion, James Hay, Novia, Nucleus, Standard Life, and Zurich

PRESS INFORMATION

For further information, please contact:

Richard Janes richard.janes@brewin.co.uk Tel. +44 (0) 20 3201 3343
Sian Robertson: Sian.Robertson@brewin.co.uk / Tel: (0) 20 3201 3026
Payal Nair payal.nair@brewin.co.uk Tel: +44 (0) 20 3201 3342
FTI Consulting: brewindolphinconsumer@fticonsulting.com / Tel: (0)20 33195642
Maitland - Bally Kaur: bally.kaur@maitlandgroup.com Tel: +44 (0) 20 3077 1219

About Brewin Dolphin

Brewin Dolphin is a UK FTSE 250 leading provider of discretionary wealth management. With £40.1* billion in funds under management, it offers award-winning personalised wealth management services that meet the varied needs of over 80,000 account holders (including individuals, charities and pension funds) and the adviser.

We give clients security and wellbeing by helping them to protect and grow their wealth, in order to enrich their lives by achieving their goals and aspirations. Our services range from bespoke, discretionary investment management to retirement planning and tax-efficient investing. Our focus on discretionary investment management has led to significant growth in client funds and we now manage £33.8* billion on a discretionary basis. The value of investments and any income from them can fall, and you may get back less than invested.

In line with the premium we place on personal relationships, we've built a network of 29 offices across the UK, Jersey and Dublin, staffed by qualified investment managers and financial planners. We are committed to the most exacting standards of client service, with long-term thinking and absolute focus on our clients' needs at the core.

*as of 30 September 2017