Summer boom for private client brokers

Click to follow
The Independent Online

Financial Editor

Private client stockbrokers are suddenly enjoying a new surge of business, which is virtually unknown in August.

Barclays said it was taking on about 700 new customers a day. "We have seen a significant rise in people going in for discretionary and non-discretionary broking services," Justin Urquhart Stewart, of Barclays Stockbrokers, said. "It seems driven by growing insecurity; people are very aware of the need to save more for their own provision as the state retreats, and are stuffing money away like distressed squirrels."

The stampede of new business comes amid a growing shake-out among private client stockbrokers.

The largest development was formally confirmed yesterday when King and Shaxson said its pounds 16m bid for Allied Provincial Securities has been declared unconditional in all respects. King and Shaxson, which already owns the broker Greig Middleton, will expand to 50,000 clients with pounds 7.5bn of funds under management.

"It is a natural development of a market place where one of the driving forces is the need for greater technology and back offices. You will see larger groups of broking houses looking for economies of scale," said Gill Nott, chief executive of ProShare, which promotes private share ownershipe.

The retail broking sector is facing a period of considerable upheaval, from both the technology and regulatory point of view. "There is a lot of nervousness about the introduction next year of Crest, the electronic settlement system," Mark Kemp-Gee, chairman of Greig Middleton, said. "There is also Tradepoint, the new electronic exchange starting, and the Stock Exchange is bringing in a new small order system."

King and Shaxson estimates the private client broking market at around 800,000 portfolios, of which it will have some 50,000. Some of the big City houses, such as Cazenove and James Capel, are also very active in this market.

The average net worth of clients using the bespoke stockbroking services provided by the King & Shaxson group is pounds 650,000-pounds 700,000, with individual portfolios of around pounds 150,000.