Newton Investment Management is selling its private client business to Standard Life Wealth, saying the complicated regulatory environment has made it difficult to manage both institutional and private clients.

The agreement, announced today, is expected to close in the third quarter of 2013, subject to regulatory approval. The private client business covers 7 per cent of Newton’s assets under management, with a value of £3.6bn, and comprises approximately 3,000 private clients.

The decision follows what Newton described in a statement as “a thorough strategic and operational review of our business”.

Andrew Pitt, Newton’s head of charities, told civilsociety.co.uk that nearly £400m of the sum represents charity assets managed on behalf of about 120 charities.

“This includes all charity relationships managed by the Edinburgh and Leeds offices, and those charity clients looked after by our private client team in London that are directly connected to private clients – such as private charitable foundations,” he said.

Difficult regulatory environment

In terms of Newton’s motivations for making the deal, Pitt said that servicing private clients in today’s regulatory environment has become increasingly difficult.

“It’s our belief that firms in the past who have been both institutional managers – which is very much the core of what Newton does – and which also service private clients are going to be looking quite closely at their business model,” he said.

“Does it make sense to look after a relatively small private client business with all of the regulatory complication that one has to deal with these days in relation to them?”
     
Newton’s business will now focus on managing £28.9bn of institutional assets, £15.7bn of assets for pooled investment funds and £4.3bn of charity assets.

Focus on targeted returns

David Driver, managing director of Standard Life Wealth, said that his firm would be applying its own particular expertise to managing their new charity clients.

“The Standard Life Wealth investment management service for charities is built on the knowledge and experience of the Standard Life group, which has been investing to fund pensions and life assurance policies for over 180 years,” he said.

“The investment techniques we use for our charity clients have their roots in institutional pension scheme investing, where addressing specific liabilities and targets is the priority. In fact, the techniques we use in managing portfolios have been designed with targeted returns at their heart.”