Rathbones' £104 million deal to buy Speirs & Jeffrey underlines the challenges facing wealth management firms lacking scale. 

In a letter to clients, S&J chief executive Russell Crichton outlined why Scotland's largest wealth firm is being sold 112 years after it was established in Glasgow.  

'Our industry is undergoing rapid change and consolidation driven by a range of factors, and we have come to the view that S&J is already too big to be a boutique company and yet also too small to fully respond and continue to develop as it is,' Crichton wrote

'We have therefore been working steadily towards an appropriate change in ownership.'

Crichton also revealed that over recent months he has also held talks with a number of 'carefully selected' peer firms 

While Tilney-owner Permira had been strongly linked with a bid, Crichton indicated that Rathbones had always been the frontrunner. 

'Right at the start of this process, we identified Rathbones as the most likely “best fit” for S&J in terms of shared values in meeting the long term interests of you our clients.

'In a sense we consider Rathbones to be a bigger version of ourselves, with the same underlying ethos and culture of care for the client, and with additional strengths and capabilities,' he said.

The decision to sell to Rathbones was nonetheless not an easy one and took a great deal of deliberation, he added. 

'We have thought long and hard about giving up our independent ownership which has served us so well for 112 years but we firmly believe this is now the right thing to do,' Crichton said. 

'We wish our clients to benefit from Rathbones’ wider range of
services. We are excited by the scope to invest faster in IT and digital opportunities.

'We expect aspects such as Rathbones’ specialist charities expertise, banking licence and financial planning capability to prove very relevant over the long term and wish to ensure our clients benefit from these.'

S&J's 38 investment professionals will join Rathbones when the deal completes in the third quarter. Between them, they look after £6.7 billion in assets on behalf of 8,500 clients, three quarters of which have been with the firm for more than 10 years. 

Rathbones also penned a letter to S&J's clients to offer some reassurance. 

'We are delighted that the Speirs & Jeffrey investment team will be joining us at Rathbones and are very much looking forward to welcoming them on board,' Rathbones chief Philip Howell wrote. 

'I would like to reassure you that as a client of the overall Rathbones group, your relationship with your existing investment manager remains the same as it has been until now and we will strive to continue offering you the same standard of personal service you currently enjoy.

'In addition, you will gain access to a number of additional specialist services and further strengths relating to the greater scale and deeper
resource available within a larger organisation.'