Coutts’ CEO Peter Flavel talks about winning over the next generation of innovative clients and giving back to society through impact investing
When Peter Flavel, chief executive of Coutts & Co, first arrived at his offices in the heart of London’s West End in March 2016, the UK focus was new to him. He spoke enthusiastically about swapping scheduled flights across Asia, as regional boss of JP Morgan Private Wealth Management, for a new timetable of “train journeys to Edinburgh, Birmingham and Portsmouth”.
His genuine affection for often unsung regional hubs has since become evident from a domestic expansion strategy, heralded by Coutts’ 2015 sale of its international business, including a strong Asian franchise, to UBP.
“I don’t need to look around elsewhere for great opportunities, we already have enough closer to home,” he says, highlighting plans to upgrade many of the 19m customers of parent bank NatWest, requiring a more bespoke service.
So far, the strategy has held up against a tough backdrop. While net new money for 2022 was down from £3bn ($3.6bn) to £2bn, with managed assets of £33.4bn negatively impacted by “adverse investment market movements linked to the weaker economic outlook”, income hit record levels, boosting profits by 25 per cent to £436m.
Achievements include closing the “second vintage” of Coutts’ £80m British growth fund, in which 22 per cent of portfolio firms are female-owned. “We will do more in this market,” he promises, gently swiping at US competitors. “We are not simply going to distribute product in the same way as it comes out of American investment banks. That’s not for us. We are looking at UK opportunities.”
Forefront of innovation
Investment in diverse, pre-IPO UK entrepreneurs should be central to Coutts’ role in both wealth management and broader society, believes the modest, plain-spoken yet innovative banker. “If we look at medical tech and drugs, the UK has been at the forefront since the second world war,” says Mr Flavel, who cut his teeth as a commercial litigation lawyer in 1980s Melbourne, Australia, before breaching the senior echelons of wealth management in Singapore and Hong Kong, prior to his latest incarnation at Coutts.
“We easily forget that the UK is very innovative,” he says, drawing attention to research work at Oxford and Cambridge universities, which he fears is not “commercialised” sufficiently before “being transported” to other parts of the world.
“Sometimes, you need to educate clients about just how much is coming out of the UK and show them that the investment opportunities are here.”
While he was parachuted into a maelstrom of political rivalry and economic chaos leading up to and following the Brexit referendum in 2016, he believes clients – including musicians and other artists – will overcome hurdles to providing services in neighbouring European markets.
“There are impediments that were not there pre-Brexit,” says Mr Flavel. “I think they will go away over time, because I don’t see them as fundamental, belonging more in the ‘annoying’ basket. You are not seeing musical tours cancelled, they just need to be better organised. What it has caused British exporters to do is realise there are other markets than Europe around the world, and that’s not a bad thing.”
Interactive entertainment
Talking with Mr Flavel, it becomes clear his dialogue with rappers, old school musicians including Chic’s Nile Rodgers and an emerging cohort of youthful gamers – or “interactive entertainers” as he calls them – is more than a temporary flirtation.
His message to the next generation of entrepreneurs is spread by a mix of social media and word of mouth. “At times we do need to explain who Coutts are, that we have been in and around the media and entertainment industry going back hundreds of years,” he says, recalling historical clients including British author Charles Dickens, Polish composer Frederic Chopin and Victorian era Australian soprano Dame Nellie Melba.
It is a strategy with many fans in the wealth management world. “Peter has a lot of experience and absolute focus on his bank’s strengths,” says Gerard Aquilina, partner at Cone Marshall, an international firm specialising in succession planning and previously a senior banker at UBS, Barclays and HSBC. “The future is all about those banks which focus on transition to the next generation of wealthy rich, giving back to society through ESG and impact investing. If Coutts can continue to capitalise on this trend, they will do well.”
The group to which Coutts needs no introduction is that of royal families in many countries, including the UK. A visitor to Buckingham Palace garden parties and environmental-focused gatherings of industry leaders at St James’s Palace, Mr Flavel led tributes after the Queen’s passing and ordered staff at Coutts HQ in The Strand to fly the Union Flag at half-mast.
Recalling meetings with King Charles III before his accession to the throne, he lauds the sovereign’s commitment, through the sustainable markets initiative, to reducing carbon emissions across airlines, shipping firms and road hauliers
This time it’s personal
“These are values he holds and his convening power is enormous, so I think the King will continue to be a force for good on that front,” says Mr Flavel, who led a review of the firm’s strategy around environmental, social and governance investing soon after his appointment.
“We asked ourselves: what should be our approach to ESG investing? Should we set up a new set of green funds, which is what most asset managers do,” he recalls. After 18 months of behind-the-scenes deliberation, the bank decided it could achieve superior risk-adjusted returns by introducing ESG filters for the entire product range.
He oversaw a parallel exercise “some years ago”, de-risking the client book of business from questionable jurisdictions, including Russia, “where we thought reputational risk was too high. I am pleased to say we have no clients who have been sanctioned,” he says, referring to the financial fallout of Moscow’s continued aggression against Ukraine. Russian clients – “not a small number and not a large one” – were “asked to take their business elsewhere”.
So evangelical has he become about the ability of investment managers to improve society and slow down climate change that he encourages a “national conversation” among employees, employers and politicians about pension plans reducing their carbon footprint. NatWest Group’s recent 85 per cent majority shareholding purchase of Cushon, a workplace pensions and savings fintech, marks a foray into a sector he feels is “ripe for disruption” and client engagement.
“If people are really concerned about their carbon footprint, they need to be taking stock of their pension and asking how asset managers are investing their money,” he believes, adding that continued dialogue between client and wealth manager is key to the industry’s future.
“Some of our clients are self-directed and want to do all their transactions without any contact, but that’s not really the Coutts way of doing business,” he says, emphasising the need for a “digitally enabled” conversation backed by robust underlying technology. “If you want to self-serve, you can do this, but for us, at Coutts, there will always be a person there for you to talk to, as wealth is a personal business.”
Mr Flavel is certainly not resting on his laurels, leaving commentators keenly awaiting the next stage of his and Coutts’ journey. All agree that when he joined the traditional bank, it need an ambitious shake-up and growth plan, which he and his team have methodically executed. While he stresses that there are no longer any ambitions outside the UK, the brand is now so strong internationally that many believe its star could shine even more brightly.
“The latest financial results are showing that Peter’s vision is now reaching an impressive velocity,” says Seb Dovey, a leading independent wealth management consultant. “In many respects, Peter’s achievements as CEO in the UK for a marquee entity such as Coutts should be noted much more widely on the global stage.”
