Battle is on for client funds

Michael Kavanagh talks to one of the South West's top firms about its decision to set up a portfolio management arm

South West firm Clarke Willmott & Clarke is joining the growing ranks of provincial law firms offering fully-fledged asset management services to an extensive and affluent client base.

The firm, which vies with Exeter-based Bond Pearce and Bristol-based Bevan Ashford at the top of rankings of South West law firms, recruited Andrew Curtis last September to establish its asset management arm. Curtis, previously director of business development at NatWest Investments, will lead a team of four, co-ordinating both portfolio management and packaged products service across the firm.

The firm, as you would expect for a nine office operation with around 100 solicitors, is involved in a range of commercial law fields, including intellectual property, environmental law, property, agriculture, professional negligence and even liquor licensing.

But the firm also remains committed to developing what it describes as a "very large private client base" covered by its geographical spread of offices from its head office in Taunton to Bridgwater, Bristol, Chard, Crewkerne, Langport, Ruishton, Wellington, and Yeovil.

The decision to commit resources to establishing a financial services and portfolio management arm was taken on the basis that the firm had to develop its use of client funds or risk losing them entirely.

In more elaborate terms, says Curtis, there is a squeeze on solicitors who have traditionally introduced clients to stockbrokers and worked alongside them in administering investments. "The shorter settlement periods mean there isn't room for the solicitor in this traditional intermediary role," says Curtis.

This has combined with outside competition which further threatens this client-firm bond in dealing with financial affairs.

"Private client asset management is very competitive," says Curtis. "There are an increasing number of financial operators in the field, from stockbrokers, merchant banks, to high street banks who can offer in-house financial and legal services, and are even now offering services in trusts and wills. There is a feeling in the legal profession that if you lose out over stocks and shares [for a client], you lose control of more and more of his affairs."

For the last couple of months, Curtis has been planning the setting up of the four-strong investment management team, which will also handle packaged products. He has also been familiarising himself with the "culture" of the firm – while coping with the personal dislocation of living in digs while moving house and family away from London.

"The department is not really up and running yet," he says. "We want to build it sensibly. CWC is large and we have no intention of going off half-cocked. When we open up the doors I want to hit the ground running, and offer a fully comprehensive service," he says. "We have top critical mass and credibility."

At the moment, funds held under direct management by the firm are small. But other clients funds "associated" – to use Curtis's term – are substantial. His job will be to market as well as administer the direct asset management to clients, and corral enough funds into the operation to justify its costs.

He is confident he can do so. "So long as we make this robust and professional, we will bring in business," he says.

The firm has opted to conduct share dealings through LawShare – which was set up for solicitors to serve the legal market.

"The terms it offers can be matched by other providers in the market place but they understand the complex approach of Law Society regulation, which is different from other FSA-regulated environments for handling clients' money," says Curtis.

While Curtis' background is in asset management, he believes changes in the market for packaged products provided by life offices – particularly regarding disclosure – also favour law firms willing to tackle the sector.

"Certainly, the whole life business has had to look hard at how it does business – you can see that in how many of the products have been withdrawn, and a lot of new ones are coming on to the market," he says.

"Solicitors have recognised the commissions as belonging to the client, and disclosure merely means some elements of the financial services industry are catching up with the legal profession – where you have to declare if you have any interest and account for that commission," he says. In this respect at least, solicitors are ahead of the field.