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The grown-ups have arrived: Dolfin's Mr Fixit on what's next for the wealth manager

Alexandra Newlove, 18/09/2020

Wealth manager Dolfin has always been something of a puzzle to its competitors – not to mention the journalists covering the sector.

On the one hand there’s its slick website, shining laboratory-like Mayfair offices, and creative press engagement. For media investment briefings – at most firms a snooze-fest of epic proportions – Dolfin’s CIO Simon Black uses a wine tasting “world tour” to talk about the regions and sectors he’s keen on.

The 2013-founded firm feels young, creative, and cool – a world away from the stuffy surrounds in which money managers to the wealthy usually work.

It has also attracted some talented people, luring in alumni of Deutsche Bank, UBP, JP Morgan, and Credit Suisse.

On the other, staff turnover is high with some of the aforementioned talent not sticking around long. The strategy at the £3 billion AUM private client investment manager can seem confused (dozens of programmers in Amsterdam?), and the firm seems to lack discipline at times.

Staff gossip flagrantly and departees have been known to ring up journalists out of the blue to air their grievances. Great for reporters – not so great for senior management. One former staffer painted a picture of millennial upstarts who have no interest in learning from their older, more experienced colleagues.

As I relay some of this to Dolfin’s newly arrived Mr Fixit, Robin Davies, (officially head of transformation), he looks on the verge of nodding, and opts for diplomacy: “It’s interesting what you say about the ‘start-up vibe’ because obviously it’s a firm that has come up very quickly, and I think what we’ve reached now is a juncture, which culminated at the end of April with a step-change for the business.”

He’s talking about the departure of former chief executive Denis Nagy, an intense thirty-something Russian whose former career it was difficult to get a handle on.

“A lot changed then, and it wasn’t just one person’s departure,” Mr Davies continues.

“As you were saying, it was this ‘cool start-up’ and with that comes a team that obviously has to have the energy, drive, and boldness to get the business growing as fast as this one has.

“But with that comes challenges as well. The challenge that the firm faced up to that point was one of a relatively young and energetic team managing the complexity of a regulated financial services company.”

Denis Nagy

As Mr Davies goes on to explain, it is now time for the firm to “mature” and professionalise. He himself forms part of this new look, having been brought in at the insistence of the chief executive designate – whose name will be revealed when his appointment is approved by the regulator.

Mr Davies, a management consultant, has sensible City pedigree – having, after leaving the British Army, held senior operations and change posts at the likes of Citi, Deutsche Bank, and Lloyds.

The firm will be changing its governance structure and implementing a proper board of directors as opposed to the advisory panel it formerly had in place. The board will be chaired by Rodney Baker-Bates, an existing adviser to the firm and experienced NED who simultaneously chairs Willis Towers Watson.

Dolfin's main backer, wealthy businessman Roman Joukovski – who was previously linked by marriage to Ukrainian oligarchs – will step back from the business entirely, having been an adviser to it.

Rodney Baker-Bates

Another board member Mr Davies makes a point of mentioning is Stephen Kingsley, a man with a particular focus on risk and compliance.

Dolfin raised some eyebrows when, in 2019, it announced it was buying the UK arm of Falcon Private Bank, the Swiss entity which became so embroiled in the 1MDB corruption scandal, it has been forced to shut down. Dolfin has also had brushes with the regulator in its own right.

However, it seems that taking on clients who might not pass the sniff test at competitors will form part of the ongoing strategy.

Davies: “We’re looking at where Dolfin is strong. What we have historically, is a business that differentiates itself because it deals with international clients…who the bigger banks may not be willing to deal with because the client risk profile doesn’t fit a big corporate’s standard risk model.

“The counter to this is we have to become the best risk managers on the street. We have to be able to operate going forward with sophistication in onboarding clients, managing risk, and conforming to our compliance obligations to such a degree that we can manage that client base.”

Elsewhere Mr Davies will be looking to streamline the business. At the moment it is trying to be all things to all people, including a tech start-up, insitutional custody business, investor visa specialist, and traditional private client wealth manager. It reportedly spent millions developing a client platform that, as one staff member told me, could have been bought “off the shelf” for a six-figure sum.

This platform business line is indeed under review, Mr Davies confirms, with investment management to be the core focus in future, though the firm will differentiate by offering left-of-field and creative products, including, most likely, a cryptocurency offering.

Another area of focus is culture and communication: “We don't want to be one of these corporate efforts where you put a bunch of values on a slide and say this is us. The new leadership will be setting the values and the behaviours we would like to see, by living them.”

Part of this means getting people back into the office, albeit on a flexible basis, so this new culture becomes catching.

The firm also sacked its PR agency and will now be dealing with the media on a “straight from the horse’s mouth” basis.

Even as an outsider with little overview of the books, I’ve often wondered how the 2013-founded boutique remained solvent – who are the clients? What’s up with the multi-million-pound tech spend? A penthouse office Berkeley Street?

I’ve known boutiques with twice Dolfin’s stated £3 billion AUM, employing 75 people and working out of scruffy lower-ground floor offices. Dolfin turned over about £13 million in 2018 but peaked at 130 staff earlier this year, before widespread redundancies earlier this month. As we reported at the time, around one in seven left.

“The reality is the macro environment for everybody has been extremely difficult,” Mr Davies says of the staffing cuts.

“Dolfin had set itself up for growth on a similar rate to that at which it was growing before and the reality is that we have had to cut our cloth. It is with regret that we've had to resize the firm.”

It turns out one of Mr Davies’s workstreams hones in more closely on this spendthrift attitude: “I mean, you’ve been to the cheese and wine parties. As a firm, you could say they have certainly not shied away from spending their money in the past,” he says, in the manner of an indulgent parent.

“What we want to see is good margins and responsible management of costs. But at the same time, we want to invest in product innovation, and in good people.”

It all sounds great guys, and best of luck to you, we can only hope the wine tastings survive.

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