Quilter boss: Why Westminster needs to keep its ‘tinkering’ hands off the City

Every week, Charlie Conchie sits down with the biggest movers and shakers in financial services. This week it’s Steven Levin, chief executive of wealth manager Quilter

Ask most City bosses for a view on the government or their rivals, and you’ll get a glance at a notepad and a rehearsed line written by the advisors shuffling nervously next to them.

But as Steven Levin stands in the lobby of Quilter HQ in St Paul’s, still sharing his thoughts on the “tinkering” hands of government some ten minutes after our meeting was due to wrap-up, you get the sense there’s some heart behind it.

Levin leads what might be called the City’s wealth manager-in-waiting, snapping at the heels of troubled giant St James’s Place as it grapples with a compensation scandal and a massive crisis of confidence. 

He’s a burly, rugby-watching South African that ditched his early career as an equity analyst to run businesses rather than “watching” from the sidelines. As he harks back to life as an analyst, you start to understand why.

“I actually wanted to be on the field instead of commentating from the back on the stands – ‘that guy’s offside, he’s shit!’,” he shouts, with some enthusiasm.

———

Levin took over the reins of the money manager 18 months ago as long-time chief Paul Feeney stepped down after a decade. He’s a company man; a 26-year veteran who cut his teeth in the late 90s at the South African division of Old Mutual, which was then carved off in 2016 and became Quilter two years later.

Groomed for the top job and central to the strategy of his predecessor, he says it’s been a “relatively easy” transition into the role with no need for swashbuckling deals or strategic reviews. 

Quilter used to talk about itself as “not the finished article” a few years ago, he says, but “we don’t talk about that anymore”.

Even so, the South African has been forced to grapple with a turbulent 12 months in his time in charge. A record £57.45bn was redeemed from UK funds in 2023 as cost of living pressures squeezed the middle classes and rising interest rates boosted the risk-free appeal of cash.

Scores of smaller rivals have either been snapped up or merged with competitors, and regulators are circling with a newly beefed up consumer mandate looking to stamp out exorbitant fees.

With that in the background, he’s also been trying to strip out £45m in costs. It’s hardly been a cushy 12 months to settle in.

“It was a very tough year last year,” Levin says. “But actually we did really well. We’d lost market share [after a transfer of customers onto a new platform in 2021], but we’ve been working hard and we’ve made significant progress in getting back to the strongest position we’ve had.”

While certainly dented, Quilter has shrugged off the worst of the turmoil. Sentiment looks to be on the rebound, with net inflows doubling from a low base to £810m between January and the end of March. Total assets under management ticked up five per cent to £111.6bn. 

Key rival St James’s Place meanwhile reported that its flows had more than halved to £700m this week.

“What I can’t say is how much of that is us doing well and gaining market share, and how much of that is a market improvement,” Levin says, prior to the numbers being released to the market. 

“We wait until we see more data we don’t really know. I think it’s a bit of both is my view.” 

Opening up

While investor sentiment appears to be returning, the regulatory question is one that still hangs more precariously over Quilter and its peers.

The Financial Conduct Authority has been on the warpath against money managers over fees and concerns over a slack approach to advising clients.

St James’s Place, which still dwarfs Quilter in terms of managed assets and market cap, has been hammered by the scrutiny. After pressure from officials last year, it was forced to overhaul its notoriously opaque fees and then set aside £426m to deal with an expected deluge of historic complaints.

Shares in St James’s Place plunged 30 per cent in a day in February as it revealed the compensation package.

Levin won’t be drawn on whether he’s making a direct play for its customers, but he’s clear that the wider market is opening up.

“What I would say is the need for advice is there, and the need for quality trusted businesses that will do the right thing has never been greater,” he adds.

“And so when there are periods of potential uncertainty or disruption in the market – and it’s not just the one you talk about [SJP], there are other examples, a lot of consolidation in the advice space, some are doing it well, someone not doing it well – those things create opportunities for quality firms.”

The risk for Quilter now, however, is that it is tarred with the same brush. Just last month, Levin launched an internal review into its services, which has since morphed into a so-called “skilled person” review, conducted by the Financial Conduct Authority.

In a note to investors last week, Barclays analysts warned the review “raises remediation risks as seen at peer SJP”. Investors for the time being seem to be waiting on Quilter for an update. 

There is a lot of change that can be quite complicated. It takes a lot of time and resource, and limits the ability to do any other innovation

Poking around in the weeds

Speak with Levin and he’s not a man to hide his annoyance at the sheer volume of external interference. 

The FCA’s consumer duty, brought in last summer, has not quite required “lock-ins” and “fundamental surgery”, but it’s taken a “huge program to deliver it”. Ministers meanwhile keep changing pension and ISA rules, and he’s just been forced into an overhaul to accommodate changes to the lifetime allowance.

Levin’s taken over the reins at a time of regulatory and political turmoil, and he’s fairly blunt that now he’d quite like to just get on with the job. 

“There is a lot of change that can be quite complicated. It takes a lot of time and resource, and limits the ability to do any other innovation,” he adds. “One of the things we would encourage the politicians to do is to stop tinkering for the sake of tinkering in things like the pension regime.”

While certain changes can be blockbuster efforts that move the dial for the industry, a lot of the rest is just “poking around in the weeds”, he says.  

Alongside that are the complications of the government’s efforts to solve the travails of the stock market, which are rippling down to wealth managers. He calls the recently announced British ISA a “political charade” and government’s efforts to offload Natwest a potentially “dangerous” way of pushing retail investors to back a single stock.

Quilter, which makes the vast majority of its cash in the UK, is not the sort of firm to swap its listing elsewhere. But it’s also not a company wedded to the idea of the London Stock Exchange. 

Despite a relatively bumper year in which shares are up around 30 per cent, Levin says turmoil and change has weighed on the market and his firm is a lot “cheaper” than it should be.

“Investors don’t like surprises, and there have been too many of those across the whole UK spectrum,” he adds. “Whether that be financial sector regulation, whether it be accounting standard, tax, everything – we don’t give enough long-term certainty.”

If a deal comes along and someone makes an offer, then “we’d consider it, as you would expect”, he adds, though his focus is on remaining a listed company

For all the engaging talk of reform, you get the sense he would quite like to focus on the day job, and for regulators and politicians to stay more firmly focused on theirs.

To adapt his own analogy, Levin might like the referees to stop blowing the whistle and just let the players get on with the game.