Big private and wealth management firms are invariably perceived as acquirers of their smaller peers especially by proponents of consolidation (i.e. strategic management consultants).
What is often overlooked, however, is the role of big private banks and wealth management firms as incubators of new firms.
In the UK, for example, Credit Suisse has spawned a number of wealth management firms over the past ten years such as Artorius Wealth Management, Crossbridge Capital and Plurimi Wealth.
The same phenomenon has also occurred at UBS, Credit Suisse’s bigger Swiss peer.
Both Cheviot Asset Management, now a component part of Quilter Cheviot, the discretionary asset management arm of Quilter plc, and what is now LGT Vestra, all started life as UBS Wealth Management breakaways.
Go back slightly further and something similar occurred at Merrill Lynch following its acquisition of Mercury Asset Management, the investment management arm of SG Warburg, a leading UK investment bank, in 1998
At least four new investment management firms - Dalton Strategic, Majedie Asset Management, NewSmith Asset Management (now part of Man Investments) and Thurleigh Investment Management (now part of Tilney Group) - some of which are, or were active in the private client market segment, can claim MAM/Merrill Lynch Investment Managers antecedents.
What is interesting about the three firms spawned by Credit Suisse over the past 10 years is that they have maintained their independence.
Founded by Terek Khlat and Jean-Pierre Aoun with backing from Julius Baer in 2008 Crossbridge Capital currently claims to oversee around $3 billion of client assets from offices in London, Monaco and Singapore.
The firm offers a “fully integrated financial services platform”, encapsulating inter alia investment advisory, discretionary investment management, family office services, risk management and fee monitoring.
Mr Khlat and Mr Aoun claim to have built a $2 billion business focused on the Middle East while at Credit Suisse in London and this market still provides a significant portion of Crossbridge Capital’s business along with Russia, central and eastern Europe, Turkey, India, East Africa and Southeast Asia.
Plurimi Wealth, which also commenced business in 2008, offers a range of investment management and advisory services to a diverse client base from offices in London, Gibraltar and Dubai, and currently oversees around $3 billion of client assets.
Founded by Ramzy Rasamny Plurimi Wealth recently received an investment from the Tosca Private Investment Fund, which now owns a significant minority interest in the firm.
Launched in 2014 by the late Richard Algar, a former Credit Suisse market head of the Channel Islands, Gibraltar and Singapore, and James Phillips Artorius Wealth is a more recent “breakaway”. It has offices in Manchester, London and Zurich.
A motivating factor behind the decision of the founders of Crossbridge and Plurimi to breakaway from Credit Suisse and establish new ventures was the desire of clients to deal with an independent wealth manager that could oversee and advise on the entirety of their wealth instead of the portion overseen by Credit Suisse.
Another interesting aspect of the breakaways, at least in the case of Plurimi, is that in the early days, at least, it used Credit Suisse for custody and execution purposes.
New firm spin-offs need not always be bad news for the hosting institution.
Nonetheless, in the case of Credit Suisse, they may have frustrated its growth as a major UK-based wealth management firm, especially at the higher end of the wealth spectrum.