Under the Financial Services Authority Conduct of Business Sourcebook 2.2.3, Brewin Dolphin (“BD”) is required to disclose the nature of its commitment to the Financial Reporting Council’s Stewardship Code (the “Code”), or where it does not commit to the Code, its alternative investment strategy.

The Financial Reporting Council (FRC) states in the Preface to the Code that:

  • The Code is addressed in the first instance to firms who manage assets on behalf of institutional shareholders such as pension funds, insurance companies, investment trusts and other collective investment vehicles.

BD’s core business does not involve institutional shareholders but rather asset management for private clients, including discretionary, advisory and execution only services. Only a small percentage of BD’s managed clients are deemed to be professionals and an even smaller percentage can be considered institutional shareholders.

Therefore, whilst BD supports the seven principles embodied in the Code, there are areas where it does not fully comply with the Code.

Should the nature of BD’s business and / or client base change significantly, we will review our commitment to the Code and make amendments to this disclosure statement as appropriate.

Proportional approach

A proportional approach is appropriate in BD’s application of all seven principles of the Stewardship Code given that:

  • the vast majority of BD managed clients are not institutional shareholders but private clients who have varying investment objectives and requirements, resulting in the creation of bespoke portfolios;
  • the various client portfolios managed by BD are diversified across multiple holdings in various markets and most individual holdings are not material relative to the size of companies;
  • all clients holding stock in BD nominees are offered the opportunity to exercise their votes as they see fit, rather than as BD sees fit.

Principle 1

Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities.

This disclosure statement serves as our policy on how we discharge our stewardship responsibilities. Our proportional approach outlined above, details why we may not fully comply with any of the principles.

Principle 2

Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed.

In order to ensure that BD acts in the interests of all its clients BD has a policy for managing and mitigating conflicts of interest.

Principle 3

Institutional investors should monitor their investee companies.

To ensure that its’ investee companies are properly monitored BD’s equity research team regularly monitor all appropriate FTSE 100 stocks and a selection of specific FTSE 250 stocks based on market capitalisation. Individual members of the team specialise in particular industries and sectors allowing them to maintain a detailed knowledge of the key drivers for each sector. Each analyst is responsible for keeping note on all of the companies that they cover and producing research that reflects their current views.

Face to face meetings with the senior management of companies is an integral part of the research process which allows a vital qualitative input into the process. The team’s research methodology focuses on three areas; price momentum, value and growth and positive newsflow.

BD also has a team responsible for the research of Investment Companies. They also conduct meetings with fund managers and boards as part of their process of formulating recommendations based on both quantative and qualitative information. As part of a two way process of communication Brewin Dolphin is regularly canvassed by boards as to the advisability of various proposals.

As BD manages portfolios on a bespoke basis, it is possible for clients to hold stocks not covered by our central research team. Where BD has holdings that are not material relative to the size of the company, engagement with the company to the extent detailed above is not proportional. In these instances individual Investment Managers will undertake their own research to the level they deem necessary and monitor the stock on an ongoing basis.

In instances where individuals within BD are or become insiders we comply fully with all applicable laws and regulations.

Principle 4

Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value.

BD considers escalating concerns on a case by case basis and any such concerns will be reflected in any research issued by our central research team.

Principle 5

Institutional investors should be willing to act collectively with other investors where appropriate.

BD is willing to act in conjunction with other companies, groups etc where we envisage that this will enhance the possibility of an outcome that will be in the long term benefit of our clients. We would obviously ensure that all action in these cases adhered to all applicable laws and regulations.

Principle 6

Institutional investors should have a clear policy on voting and disclosure of voting activity.

BD strongly believes that the voting rights attached to shares in their nominee companies should reflect the views of the underlying beneficial owners. For this reason BD operates the Brewin Dolphin Voting System which allows clients with shares held in our nominee companies to exercise their votes as they see fit rather than BD. This includes an internet proxy voting service 'Vote Your Shares'.

For those clients who do not exercise their right to vote and where BD has discretion, we will exercise voting rights in the best interest of the beneficial owners. As the beneficial owners will not necessarily all have the same investment objectives and requirements, all such votes may not be exercised in the same way. For this reason we do not use our influence to vote for or against companies.

The results of total votes cast are also posted on the 'Vote Your Shares' section of the company website.

Principle 7

Institutional investors should report periodically on their stewardship and voting activities.

As outlined above, the results of total votes cast can be viewed on the company website.

In line with our proportional approach no periodic reporting is issued regarding BD’s stewardship activities and it is not BD’s current intention to seek an independent audit opinion on its engagement and voting processes.

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Further information

For further information, please contact Richard Janes, Senior Communications Manager on 0207 246 1000.