Brokers take centre stage

BRITAIN’S robust stockbroking community was decimated after the big bang as the biggest and most venerated names were bought by the big global banks.

phillips & Drew fell to UBS, James Capel to HSBC, Cazenove was later absorbed by Jp Morgan Chase and Smith New Court by Merrill Lynch.

The loss of the longest established houses to the global giants created room for a generation of niche players which provide advice and research to minnows of the FTSE and AIM and serve private clients.

european regulation in the shape of Mifid (Markets in Financial Instruments Directive) 2 threw a fresh grenade at the sector when it was rolled out this year.

The requirement that brokers must charge fund managers for research predictably cut off a stream of income and weakened remaining players.

broker peel Hunt is being eyed up by banco Santander which is seeking to build up its corporate and investment banking franchise. That may give some hope to other second line but struggling players, such as panmure gordon, where bob Diamond is involved. There could still be deals to be done. The weeding out of traditional stockbroking houses has provided real opportunities for those investment firms which have embraced technology.

Hargreaves Lansdown has been a runaway success and provides daily analyst research to clients.

Manchester-based wealth management firm AJ bell also created a name for itself by embracing the research channel.

bell’s easy-to-use investment platform has attracted 172,000 users and it has some £42bn under management.

The climate for floats looks healthier with the arrival on the stock market of peer-topeer lender Funding Circle and the intended £5bn public offering of aston Martin.

It is hardly surprising that AJ bell’s largest investors – co-founder and chief executive andy bell and asset managers Invesco perpetual – are considering a public offer.

The reality for many small and medium sized enterprises and private investors is that big, anonymous banks do not seem that interested in looking after them.

When they do reach out, as barclays has done with Smart Investor, the platforms on offer are over- complicated and research provided so general that is not worth reading. When it comes to corporate actions, such as whether to subscribe to a rights issue, there is no human interface to help.

private investors deserve better and second-line firms such as AJ bell can provide it. regulation has made conditions harsh, but except in extremis the global players should keep their hands off.

Jardine jackpot

LLOYD’S of London has long been a magnet for global capital so we shouldn’t be outraged by the £4.3bn swoop by outsized american broking and consulting firm Marsh & McLennan on London-based Jardine Lloyd Thompson (JLT).

The deal offering a 34pc premium would have been impossible to turn down by parent Jardine Matheson, which owns 40pc of the stock.

The big attraction of JLT for Marsh is its rapid growth in emerging markets. Indeed, the great strength of many UK-based enterprises including Unilever and Dulux, part of akzo Nobel, is muscle in fast-growing nations. brexiteers are often mocked for citing global opportunities but many good british companies have recognised there is a world beyond the more sclerotic parts of europe.

To justify the high price being paid, Marsh has to find cost savings of some £192m which means culling jobs.

on past experience it will be staff in the target company who will suffer. a positive way to look at this is to say that Lloyd’s brokers still punch above their weight in underwriting risk and the deal is a vote of confidence in the durability of the City.

No frills

THE strong message from the latest Kantar data is how well grocers are doing helped over the 12 weeks to September 10 by the steamy summer and a hefty dose of World Cup.

Some of the fastest growth is still coming from no-frills challengers Lidl and aldi.

Dave Lewis, chief executive of Tesco, believes he can challenge the newcomers by adopting their model using own label and smaller assortment of brands in a back-tothe-future Jack’s format.

Hopefully it does better than Sainsbury’s did with its brief and aborted flirtation with discounter Netto.