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Profile: Creechurch Capital’s CEO on going the extra mile in a crowded market

Read 2322 times Last modified on Wednesday, 08 April 2015 10:54
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By Jonathan Yarker 26 Mar, 2015 at 00:01

Growing a business is the main aim of many company owners but managing that growth in a controlled way is just as important, if not more so, says Creechurch Capital founding partner and chief executive John Greenwood.

‘We are looking to get overall assets to £1 billion,’ he says.Four years after launch, the firm runs just over £450 million in assets under management (AUM).

‘If you just continue to grow your assets, you lose that tag of being a boutique. A billion pounds is a target and we can be a boutique at that level. We are committed to remaining a boutique and clients like that about us,’ he adds.

 

Creechurch has a main hub office on the Isle of Man, smaller presences in Manchester and London, and 25 staff in total. Its CEO ensures client service is high quality and personalised as he is mindful of the growing challenge of client retention in a crowded wealth management market.

‘The key thing is we would not be here without the support of our clients. It is about longevity of clients’ relationships with us, not the size of their portfolio. We do very personal gifts for our clients. Even after two to three years, I still try to meet clients in person,’ Greenwood says.

Thse ‘personal gifts’ are done sparingly and are tailored to clients. Examples include dinner at a Michelin-starred restaurant with a dessert designed for the client, along with an opportunity to meet the chef. On another occasion, Creechurch arranged for a day at a racetrack for a client and their grandson, who was a motorsport fan.

‘Our client retention is high but it is something you can never be complacent about, so we have to keep it in mind all the time. We always try to make people know how important they are to us,’ Greenwood says.

‘Even when clients are ill, we like to show them we care. We have an account with Liberty of London with around-the-clock flower delivery. People do comment on the efforts we make to meet them and keep in touch.

‘It is the little things that make the biggest differences. The underlying product is not that different from our peer group. What is different is the service and we get clients coming to us because they have had poor service elsewhere.’

With around 1,000 core clients, he is conscious that the UK market is well supplied and he believes the next set of opportunities could be international.

In overseas markets where wealth management may not be as advanced, Greenwood wants to target the growing middle classes.

‘The Isle of Man is more focused on the UK market than internationally. In locations such as Africa and Latin America, the middle classes are growing significantly and with it the wealth that needs to be managed. You can really make a difference in terms of nurturing those clients with their wealth,’ he says.

With this in mind, he wants to open a second office in an overseas jurisdiction. Possible locations could include Malta, Dubai or Singapore. But he remains wary of the risks that come with international expansion, and emphasises that finding and hiring individuals with specific knowledge and expertise of these markets would be crucial.

‘Many successful small businesses have had their heads handed back to them when they have moved to areas they don’t understand,’ says Greenwood.

‘We are working on a double hire to combat that for our international expansion. These potential hires have worked in these markets before and we are still chasing them. If we don’t hire them, we will have to postpone it.’

International expansion and AUM growth targets aside, Creechurch Capital is still facing the same hurdles all wealth managers face. One of these is the issue of technology.

‘The key thing is not to lose sight of IT. If you think you are up to date today you will be out of date tomorrow,’ he warns.

‘We sit down on a quarterly basis and talk to key partners and discuss what everyone is doing in the business. We are not complacent and not too proud to see what other people are doing that may be better than us.’

In terms of focusing on IT, he is aware of how important it is to ensure quality communication with clients and the access they have to information about their portfolio. For example, once when one client did not have access to the internet and needed to review their portfolio, Greenwood arranged for a pre-loaded iPad of information to be delivered personally to the client.

When it comes to the challenges associated with running a boutique, he admits he would not want to launch a firm in today’s environment of growing regulatory pressure and high competition.

Indeed, he says when the business launched it went through a difficult initial 12 months, losing money. Since then the company has strengthened and currently has recurring income of 98% and a 35% profit margin.

‘It would be a lot harder to launch the firm now. There is a lot of change and evolution in the market. The regulations have good intentions behind them.

‘From our point of view, we have the advantage of being selective and nimble.

‘The biggest risk in the industry will be having to manage pressure in margins as overall income per client has been squeezed.’

Part of this includes a greater focus on business efficiency, which Greenwood sees as crucial. Like other wealth firms, he will examine the business to see where efficiencies lie.

Creechurch’s investment performance has proved robust. Over the past three years, the firm’s balanced portfolio has returned 27.65% and over one year it is up 8.45%.

With a number of recent high profile mergers and acquisitions in the wealth space, he expects this trend to continue. He says this could pose an opportunity for Creechurch Capital, as ‘quality individuals’ become available in the aftermath of these deals.

‘We would take the opportunity to pick up some quality individuals who do not have a role currently,’ he says.

‘When we first started the business, we wanted to control our own destiny. In our past jobs we were sometimes asked to do things that were not in the best interests of clients but we had to do them. People wanted more from their discretionaries and we wanted to help them achieve that. That was really one of the main motivations when we were launching.’

 Creechurch itself might become involved in acquisition activity and has a war chest of more than £12 million for selective buys. However, Greenwood says any company it looks at would have to fit with the firm’s culture.

The current team hails from an institutional background and Greenwood says they have kept the same investment philosophy, with a high level of due diligence at a fund research level.

But he says they have had to adapt to current market conditions and familiarise themselves with asset classes such as property.

This year could be a watershed moment for Creechurch Capital, as the firm nears its five-year anniversary in November.

However, with a target to double assets and reaching the £1 billion AUM mark, Greenwood will have to be more diligent about the growth and culture of the firm than ever before.

He is confident about achieving this.

‘We can afford to be at whatever table we want to sit at. We have currently hit that tipping point in the last six months as we are more interesting than just another discretionary business,’ he says. ‘I liken it to a football team going up the divisions and having to evolve and adapt with each promotion.’

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