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Rathbone Brothers CFO on rethinking wealth management

An interview with Jennifer Mathias, finance head of the FTSE-250 investment management firm, reveals the power of innovation in financial services

Ask Jennifer Mathias what it means to be group CFO of Rathbone Brothers, the provider of investment and wealth management services for investors and trustees, and she’ll give you a straightforward answer.

When she joined the firm last April it provided the chance to run finance at a listed wealth manager where “we are the parent and in control of destiny,” having previously been CFO of Coutts and EFG that were part of other entities. It’s refreshingly blunt talk of someone brought up on a Welsh dairy farm “where no-one had heard of banks like Coutts.”

The opportunity to play a key role at Rathbone Brothers, which can trace its origins back to 1742 when it was a Liverpool-based trading business, has proved critical during the period of the coronavirus lockdown.

Mathias was about to undertake a gradual transformation process, assessing to what degree the firm’s finance function’s processes are fit for purpose, when the coronavirus struck. Now she is reassessing how the evolution should take place in the firm that offers services in discretionary investment management, unit trusts, tax planning, trust and company management, pension advice and private banking.

“The current environment creates the need for more business partnering and to be forward looking. Investment management has ridden the markets for the last 10 years has come to an abrupt end, so there’s a different skill set I’m bringing for managing the downside risk.

“I’m looking at where growth opportunities are, investment prioritisation, looking at constructive versus unproductive costs. All these commercial things come to the fore,” she says.

From her time at Lloyds Bank where she spent over a decade, Mathias is drawing on her experience of the global financial crisis as Rathbone Brothers navigates the coronavirus storm. “The most important thing is to stay calm. Completely understanding your balance sheet and your numbers means I can sleep at night, and then just bringing the team together, guiding them through what I think the next 3, 6, 9 months could play out,” she says.

“It isn’t a crystal ball- these things do have a cycle to them, and I try and describe it as a sponge- you press it one place and you need to be alert to where is it going to pop up, whether positive or negative. What are the knock on consequences of decisions you make right now?”

“Its spending time getting the team to think about scenarios. You start modelling scenarios that make your eyes boggle, but it means you get creative thinking in finance people, beyond just reporting numbers. It’s then about them having the courage to ask questions, such as why did we do it that way?” says Mathias.

Mathias says she learned much of the financial discipline and also creativity, at Lloyds Bank which she joined after completing a degree in accounting and finance at Kingston University. She joined the day after the high street giant announced its merger with TSB in 1996 on its finance graduate scheme, before moving into SME and business banking. “I worked my way round the entire P&L and balance sheet, in roles in reporting, income, costs and bad debts, balance sheet, up to interim finance director of business banking, for a period of time when there was a change over,” says Mathias.

As Lloyds grew, acquiring Cheltenham & Gloucester (C&G), Scottish Widows Investment Partnership (SWIP), Mathias took on more senior roles, becoming finance director of corporate banking after spending a year as executive assistant to group CFO Helen Weir and then head of risk and compliance for commercial banking.  “They said we want you to bring more commercial understanding into the risk function, as you did finance, but we also want it to be your big leadership role, this role was 80 odd people, based in Birmingham.”

Two years after  she took up the risk role, the global financial crisis erupted, leading to the bank’s rescue of rival HBOS (Halifax/Bank of Scotland) in which Mathias took up the corporate banking FD role in the newly formed Lloyds Banking Group- featuring international exposure and a £100bn-plus loan book. “It was daunting, but exciting because I could test my leadership skills of bringing teams together,” says Mathias.

In the role, Mathias says she had to “write off lots of money”, but says she wasn’t fazed. “I didn’t spend much time reflecting on the right and the wrong, until I started to have to make decisions on the level of impairments on two loan books that had quite different risk appetites,” she says.

She says this and other experiences at Lloyds, where there were high pressure situations, she continues to draw on, as well as the advice from valued mentors such as Tim Tookey, the group’s CFO by this stage.

But as a change in culture to a more centralised model beckoned, Mathias took up the role of CFO at Coutts, the private bank within Royal Bank of Scotland (RBS), a position that included running finance across businesses in Asia and Switzerland, as well as private bank Adam & Co.

The role provided the opportunity to help drive CEO Rory Tapner’s ambition to make Coutts an international brand, especially in Asia and the Middle East, which featured very different client risk appetites. “In finance that comes through in forecast modelling, data analysis and where you set differing growth targets and attrition levers,” says Mathias.

Another goal was bringing together four global finance teams under one umbrella. “That experience in managing remote working gave me confidence which is coming into play now,” she says.

The sale of Coutts International, provided experience in M&A work, but also meant pastures new in the form of rival EFG Private Bank, part of Swiss bank EFG International, which offered a role combining CFO and chief risk officer (CRO) responsibilities. “It kept me broader than just the executive table, to be able to touch the front of the business, chairing the credit committee every week, that then informed my finance role, because I was able to see the type of business coming in and what clients were looking for, where the risk appetite was,” says Mathias.

Of special interest were ultra high net worth international clients , “approving clients who want to open a UK account or want a £15m loan leveraged against a myriad of assets”, a role she was keen to develop until the chance came to join Rathbones.

The FTSE-250 constituent promised a group CFO role in a listed entity, after Mathias had delivered a three year change programme at EFG, “corporatizing the business, putting more capability into it and setting it up for growth,” she says.

At RathbonesMathias could see the scope to undertake the full range of investor relations, as well as finesse the finance function, choosing to take a gradual route to transformation rather than revolution.

“We’ll just do it in steps. The average level of service at Rathbones is approximately 15 years. It’s going to be a ‘discover with us’ process, how do we identify our end to end processes, is it fit for purpose? Do we need to tweak a few things?

“It’s very much about looking at where we’re going to spend investment in the second half of the year. I’m already talking to the team about how that will impact 2021, where will we be able to lock in process change this year that may deliver cost savings next year,” she says.

Future planning

In the meantime, Mathias is looking at the current challenge of coronavirus very much as a glass half full. “I could keep coming up with silver linings to the corona crisis. If you ask me the most negative thing, aside from the obvious revenue impacts, I’d probably have to scratch my head because I see too much opportunity,” she says, channelling a digital strategy she and CEO Paul Stockton developed last October.

“Rathbonesdoubled its size in the last five years. For the next doubling of growth, we are very much looking at digital, our client proposition and our processes, and our capabilities and how agile we are,” she says.

“We have not missed a beat working remotely with clients and with one another. It’s like, forget that finance target operating model I was thinking in March, I’m going for the next couple of notches up in terms of our ambition now because remote working has brought down so many barriers.

“There are many people in Rathbones who would not have dreamt of working from home, or flexible working, who are complete converts. Therein lies an opportunity in the operating model around those investment managers, for accelerating our digital investment, centralising processes without losing the personal touch with clients,” she says.

Mathias believes the world has changed so much as a result of coronavirus, that the whole approach to private banking and wealth management may need to be rethought. “For example, will our clients with an average age of 60 ever want to come into a city again? These are all the things we are thinking about and seeing opportunity to create capacity that we can invest in,” she says.

What is Mathias dabbling with, thinking creatively on, now? “I think dabble is what’s in my nature, and why the Rathbones board hired me. Until recently when our new COO arrived, I was  dabbling in the change function. I’ve handed that neatly over to him. Our HR director retired at the end of 2019 so I’ve been dabbling a lot in people matters, which again goes back to my Lloyds upbringing,” she says.

“The thing I am dabbling with at the moment is, what is the employee proposition going forward? How can we make ourselves more attractive to a bigger, diverse proposition and population?. I sponsor diversity and inclusion (D&I) and I see this as a bigopportunity. We’ve all proven we can work remotely, but it’s not just a case of doing what I did in the office at home, it’s an opportunity to redesign the areas of our business and how we operate to maximise roles that feature permanent home-working, to be flexible, and gives long servers at Rathbones opportunities for new skills and training.

“It is not something that my relatively new colleagues expect of the CFO to be making a big shout about around the executive table. But I’m rather repetitively vocal about it at the moment,” she adds.

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