The so-called “Big Bang” in 1986, when the UK de-regulated its financial markets and broke down barriers between market makers and traders, saw a fresh wave of Britons cross the pond, sent by employers keen to make the most of an anticipated explosion in new investment banking business.
New York City’s vibrant arts, education, fashion and publishing industries, meanwhile, have been luring creative types from the UK for decades, including such musicians as John Lennon and Sting; composer Richard Rodney Bennett; authors Martin Amis and Salman Rushdie; Vogue editor-in-chief Anna Wintour; journalist and Daily Beast founder Tina Brown; former BBC director-general turned New York Times honcho Mark Thompson; ex-tabloid newspaper editor-turned-CNN-broadcaster Piers Morgan; art historian and Columbia University professor Simon Schama; and actresses Kim Cattrall and Kate Winslet.
And then, of course, there’s Hollywood…
800,000-plus Brits
Altogether, around 829,000 British nationals are estimated to be living in the US, according to Foreign & Commonwealth Office figures.
The number of Brits resident in New York City itself is something of a mystery, according to officials, although one website for British expats recently made reference to some 250,000 living in the “tri-state” area of New York, New Jersey and Connecticut.
Despite these relatively large numbers, few independent wealth managers have specifically targeted expat Britons in the US generally, or New York in particular – at least, until now, says Benjamin Alderson, senior area manager for deVere USA Inc.
A subsidiary of the global advisory giant deVere Group, deVere USA was set up in 2011 to do just that.
“But we’re not just looking to cater to Brits, even though the majority of our clients will be British nationals,” Alderson says, in his office on the sixth floor of a 40-storey office tower on Third Avenue, between East 47th and East 48th streets.
“In the year-and-a-bit that our US business has been operational, we’ve taken on more than 1,000 clients, and of these, in addition to Brits, we have many Europeans as well as Americans.
“What most of them have in common is that they are part of what we at deVere call the ‘global mobility market’, which is comprised of senior-level executives and high-net-worths and their families, who have moved with their careers around the world, and for now, at least, are in the US.”
DeVere’s American venture began in June 2011, with an office in Miami’s Brickell financial district. The US headquarters was always seen ultimately as being in New York – where a temporary office was finally opened in the landmark Chrysler building on East 42nd Street in March, 2012.
The Miami outpost remains, with a third US office due to open in San Francisco before the end of March. (A planned Houston office is still on the drawing board, to cater to oil industry executives who pitch up there, often after stints in petrochemical extraction countries around the globe.)
A Toronto, Canada operation, meanwhile, is expected to open by the second half of this year if not before.
Fee-only model
Entering the US market has been neither easy nor cheap, deVere executives – including founder and chief executive Nigel Green – say.
“It took 18 months, and half a million pounds, such was the complexity,” Alderson groans.
“It’s an extremely complicated, heavily regulated market, making it a real challenge to get into, which is no doubt why so few of our competitors have tried.”
Even more astonishing to many of its rivals than the cost of the deVere USA roll-out, though, has been the fact that here, the company has adopted a fee-only remuneration business model that is all but unrecognisable from the commission-based one it has traditionally used in other parts of the world, at least until now.
This, say Green and Alderson, is because it had to: the US, like the UK and certain other markets, has moved to end the use of commissions as a means of paying for financial advice.
As Green sees it, the rest of the world is moving inexorably this way as well.
“What happens in the US market is, typically, a good indicator of what will happen in the wider industry in, say, five to 10 years,” he says.
“Therefore, it is highly likely that this fee-focused model will be increasingly used elsewhere, particularly in other heavily regulated markets, and it is already in practice in some of the markets in which we operate.”
The deVere USA formula is in keeping with a “dual business model” approach within deVere that Green outlines last November, in the wake of his company’s acquisition of UAE-based rival Acuma.
One company, two biz models
As Green explained then, deVere plans increasingly to operate two separate and distinct advisory businesses – with one designed to accommodate highly regulated countries, like the US, with a fee-based or fee-only charging structure, while the other remains a more traditional, commission-based operation.
Alderson says deVere’s target clients in the US thus far have tended to be “quite sophisticated”, in that they arrive at deVere having already got lawyers and accountants; typically they also have complex financial portfolios, involving assets and pensions in more than one country, or at least, not in the US.
“I would say our typical profile client is an executive, 35 to 70 in age – we have one who is 78 – with income well above $250,000, and a net worth anywhere up to $5m,” Alderson says.
“But unlike some of our [US] competitors, we don’t set minimum account sizes. We are looking to build a relationship over the long term.”
Spot-changing
DeVere executives are aware that there may be scepticism in some quarters about whether the company really will be capable of changing its commission-based remuneration spots – or whether it even genuinely intends to. But they say they are playing a long game, and in the meantime are ignoring their critics, and concentrating on getting things right with the relevant regulators.
“They’ve got very clear rules here in the US, so we have become a registered investment adviser, regulated by the Securities and Exchange Commission,” says Alderson.
“And we’re pretty sure we are on the right track.”
To help ensure it gets things right, deVere has engaged two major US compliance consultancies to, among other things, oversee the drafting of a raft of compliance documents required by the SEC regulations. Under these regulations, deVere is, for example, obliged to give every client who walks through its doors both a corporate disclosure brochure and what Alderson calls an “individual brochure supplement”, with the name and relevant details of his or her deVere adviser, at least 48 hours before any business is conducted.
“These brochures are very serious,” Alderson adds, bringing out a copy of his own personal brochure supplement, and pointing to a space on page 2, in which deVere is “required to disclose any legal or disciplinary events material to a client’s evaluation” of him.
The space on his brochure supplement, which is formally known as a “Part 2B of Form ADV”, is empty, but Alderson notes that this particular space on the individual brochure supplements of some other US advisers won’t be, even if they have done nothing wrong.
That’s because according to the 26-page-long SEC regulation covering such brochure supplements, all complaints filed by clients against an individual adviser must be listed in this space on their individual brochure supplements for a period of 10 years, even if they have not been found to be legitimate complaints.
“So you cannot be anything but squeaky clean, or it will show,” Alderson says.
British expat
Alderson – like most of his clients – is himself a British expat. He has a degree in business economics from the University of Durham. Prior to coming to New York with deVere, Alderson spent a total of six years as a financial adviser in Dubai, both with deVere and Globaleye.
He heads up the deVere USA team, helped by Andoni Yturralde, head of private client business; Bradley Hamilton, area manager of the New York office; and Adrian Flambard, a senior investment adviser, whose past roles included stints with Close Offshore and Kleinwort Benson.
“I’d be lying if I said it wasn’t easier in Dubai, in terms of getting set up and all,” Alderson says, gazing out of his window at a forest of midtown Manhattan skyscrapers, beyond which, somewhere, is the East River, and beyond that, the borough of Queens.
“But when I look at the opportunity we have here, and the demographic that we serve in the marketplace, I am convinced that this will be the top region in the company before long.
“It just will – certainly if we continue to develop the way we have up till now.”
| deVere USA Inc Fact Box |
| Founded: 2011 Assets under management: (US only): $50m-plus No. of clients: More than 1,000 across the US, mainly in New York Nationality breakdown of clients: Roughly 70% Brits, 10% americans, the rest mainly non-British Europeans No. of employees: Around 20 (of which approx 14 are advisers) No. of offices: Two (Miami, New York, NY); San Francisco due to open in Q1 Remuneration model: Fee-only, no commissions Regulated by: US Securities & Exchange Commission (registered investment adviser) Website: www.devere-group.com |
