Thursday 18 February 2021 9:41 am

Exclusive: Brewin Dolphin's CEO on Brexit, pandemic market sentiment and why ESG is not so clear-cut

As the City comes to terms with a new post-Brexit reality and slowly looks towards a post-pandemic recovery, City A.M sits down with the CEO of one of the Square Mile’s best-known investment managers, Robin Beer of Brewin Dolphin.

Beer, who joined the firm in 2008, initially managed the Nottingham office and was regional director for the Midlands before he became a member of the firm’s executive committee in February 2016. He was appointed CEO in June of last year, taking over from David Nicol, who had been at the helm for more than eight years.

Last month, Brewin Dolphin reported record total funds as market sentiment rebounds off the back of the Brexit deal and the vaccine rollout. Total funds increased eight per cent to a record £54.1bn in the first quarter. It represents an impressive recovery for the firm which was forced to launch an £8m cost-cutting programme when the pandemic first hit.

You became CEO in the midst of the pandemic. How have your clients’ needs changed since March of last year? For example, do you feel there is less appetite for risk? The coronavirus has created immense uncertainty and market volatility. 

Well, there are a number of factors here. The volatility that comes with any market shock such as the pandemic always brings the value of advice back into focus with clients, as they naturally seek greater reassurance. As a result, we are seeing a marked increase in the demand for advice as you will have noticed from our financial results.

Clients take advantage of the drop in asset prices to invest more

On the other hand, we certainly haven’t seen much change in risk appetite across our client base. Most of the clients we deal with have long-term time horizons and have already incorporated the likelihood of market volatility into their financial plans. In fact, what we have seen is that clients have used this long-term view to take advantage of the drop in asset prices to invest more money into equity markets.

To stay with the pandemic, how are the consequences of the Coronavirus impacting savings and investment trends?

It obviously has had a big impact on asset price volatility, however the recent strength of the global stock market recovery has instilled a sense of renewed confidence. For those individuals in the accumulation phase of their savings lifecycle, we have seen increased levels of disposable income as a result of reduced outgoings. This situation, coupled with the low levels of interest rates, has resulted in people re-evaluating their financial needs, in terms of the balance between having a suitable level of cash savings to fall back on in these uncertain economic times and investing for their long term futures. It’s a very difficult time for people to assess the impact of the options available to them, which is why the demand for advice has certainly risen in the last twelve months.

So what will be the long-term impact of the pandemic?

The world as we know it is changing as a result of the pandemic. As a company we need to be focused on innovation and making sure that we are relevant for our clients, colleagues and the communities that we work in. That means looking forward as a business into what consumers now want and responding effectively to their needs. Some of that will be in the services we offer, some of it will be in the way people are able to engage with us and equally how we consider the working environment for our staff.

Let’s look ahead, life after lockdown, the market post-Covid. What are your thoughts on the recovery process?

The recovery process is going to be intrinsically linked to the success of the roll out of the vaccine worldwide. Personally, I am quite optimistic on the long-term outlook for markets and the recovery process itself. I think the big unknown is the timeframe to achieve this and how quickly productivity and economic production can pick up on the back of a reduction in social distancing measures. I have no doubt though that over the next two to three years we’ll see good levels of recovery.

Post-Brexit, we are now the third largest player in Ireland

The UK has just Brexited, has this impacted your business yet? For example, in relation to the clients you serve in Europe or elsewhere.

Luckily it hasn’t, as the vast majority of our clients are UK-based. You’re absolutely right though, we do have a number of European clients who are affected by Brexit. Fortunately, we have an Irish business, which we bolstered with an acquisition two years ago and means we are now the third largest player in Ireland. That gives us real scale and capability to serve clients in Europe in a seamless way. And from a growth perspective we’re seeing more enquiries from potential new clients who want to be with a UK wealth manager that has access to the European market in this way.

What I keep hearing from any investor, wealth manager or asset manager is the changing role of technology, and its increasing importance. How are technological developments impacting your work and the way you serve your clients?

From a consumer perspective there is an increased demand for speed, convenience and choice, when considering whether a service provides value for money. What does this mean for the financial services industry? We have to be more relevant and the use of technology is paramount in this innovation. It is allowing us to adapt and engage with clients effectively through a multi-channel experience so we can meet their differing needs. At any time of economic uncertainty, those firms who remain strategically focussed and continue to invest for the long term will be the biggest benefactors. You’ll see across the board, ourselves included, that lots of investment has been made in technology during the pandemic, really to get the financial services market place further up the curve and in line with other sectors across the UK.

And what does that mean in practice?

What we have seen over the last nine months or so is that people have adapted to the use of technology as a primary engagement method, much more quickly than we anticipated. There is now a greater expectation on having a multi-channel delivery approach, as both the speed and convenience of service delivery are significant factors in client choice.

ESG means different things to different people

Finally, ethical investing, including implementing ESG standards in investment strategies, is increasingly ‘a thing’ in the City. Is this mere hollow talk, and PR spin, or do you see there is a genuine shift in the way investors and their clients think?

In my opinion it is definitely a trend that is here to stay. However, rather than being solely about the creation of product, the big piece for me is around education. When people talk about ESG, it often means different things to different people. From my perspective what organisations like Brewin Dolphin need to do is to articulate clearly what we mean by these terms and provide clients with education and choice.

Can you give me an example?

Sure, two people might want to have some ESG exposure within their portfolio, yet have very different views on what fits their criteria. You have to give clarity to a client so that they can make an informed decision. Ultimately, rather than being merely an investment service option, ESG principles should become embedded throughout an organisation, it needs to be in a firm’s DNA, a consistent way of thinking and operating as a corporate that also informs your investment strategy. It’s something we are working very hard on as an organisation and is undoubtedly going to be a fundamental long-term trend in the sector.