JM Finn & Co, the London-based private client stockbroker, thinks its partnership structure is ideally suited to clients’ needs in the 21st ...

JM Finn & Co, the London-based private client stockbroker, thinks its partnership structure is ideally suited to clients’ needs in the 21st century. In fact, the stockbroker believes its independence is nearly unique in a wealth management world where size seems to account for evermore importance. “Independence is pretty rare in the UK private client stockbroking business today,” said Paul Farrant, one of the 13 partners who run JM Finn. “But it’s something our clients feel is unique about us and they like it. I think they know they get greater personal service because of our independence.” JM Finn is one of only a handful of UK stockbrokers to retain its original partnership structure. And it is certainly the biggest, says Mr Farrant. Most City of London brokerage houses saw the ending of their partnership structures with the onset of the so-called financial deregulation initiative called the “Big Bang” in 1986 and the subsequent wholesale consolidation in the sector in the following years. Asked why JM Finn did not go the way of the Vickers de Costas and De Zoete & Bevans of this world by selling out, Mr Farrant said that the partners never felt an overriding desire to sell. “We could run the business just as well, if not better within a partnership – we also had independence and I think this is to be valued more than ever.” Mr Farrant added that partnership structure doe not mean JM Finn is run by a cabal of old men, with the younger staff waiting to gain hold of the reigns and eventually sell out. “No, we are a young partnership. The senior partner, James Edgedale, is in his early 40s, while a number of other partners are in their 30s.” Few firms have retained their partnership structure not just because of the chance of making money through being bought by a larger competitor, but also because few managers wanted to have unlimited liability hanging over then. “Unlimited liability certainly concentrates the mind,” said Mr Farrant. “But it helps to ensure performance is central to what we are doing at all times.” The firm’s structure also enables flexibility and is a major benefit when it comes to providing clients bespoke portfolio structures. “This is something we believe is unique about what we can provide our clients and helps us build a long-term relationship with them,” said Mr Farrant, who also runs the marketing efforts at the stockbroker. JM Finn provides both discretionary and advisory portfolio management to its client base. Funds under discretionary and advisory management are around £2.5 billion, according to the last count, said Mr Farrant. Assets under management have grown by 19 per cent in the last year and by 65 per cent in the last four years. JM Finn’s desire to grow the business was underlined in September when it recruited a heavyweight investment manager from HSBC Investment Management. Hugo Bedford was head of client relationship management at HIM and managed one of the largest private client portfolios in the UK, worth more than £400 million. Mr Bedford also brought over Ed Rogers from HIM. “Over the last twelve months, J M Finn has been joined by a number of highly qualified stockbrokers who appreciate the opportunity to work in a stable and client-focused environment,” said Mr Farrant. He added: “J M Finn believes that it provides its broking staff with an ideal environment in which to offer clients a high level of financial advice and service.” Mr Farrant says other similar hires could be in the pipeline. “It’s about finding the right people for us, because there are plenty who want to join.” Currently the firm has more than 200 employees (117 of them professional staff) and operates in three locations: London, Leeds and Bristol. It generates around 80 per cent of its revenue from private client work, and, along with much of the rest of the industry, has moved increasingly to a fee-based pricing structure. An important and growing area for JM Finn has been corporate finance, where it provides advisory services to small and medium-sized UK firms. “This has grown rapidly for us, helped by the growing popularity of AIM market,” said Mr Farrant. “There are obvious links between our corporate finance division and the private client work.” JM Finn also points out its back office expertise as something that it prides itself on. “The back office is crucial to the seamless running of the business – we are not about to outsource these functions,” said Mr Farrant. Independence and bespoke portfolio structures are what grab the attention of people in the market place when they think of JM Finn. “JM Finn is a good example of a well run private client stockbroker,” said Michael Maslinski, head of the wealth management consultancy Maslinski & Co. “They are genuinely independent, particularly in providing bespoke portfolio structuring. They do a good job in a competitive market.” But some others believe the London-based firm’s independence will ultimately be swept aside against the background of industry consolidation. “I can’t see them remaining independent much longer – I give them five years tops,” said one senior private client stockbroker who wanted to remain anonymous. “Creeping costs and a desire for the partners to make some money will ultimately undermine their independence.” A view heard all to often by Mr Farrant: “ I’ve been hearing that sort of thing for nearly twenty years, and we’re still here.”