Grant Thornton in talks to sell wealth advisory services arm
Consulting and auditing firm Grant Thornton is reportedly in talks to offload its wealth advisory services wing, which it values at around £30 million. The financial advice arm of Standard Life Aberdeen is reportedly in line to purchase the practice, as Grant Thornton looks to avert potential conflicts of interest between its UK service lines.
Grant Thornton’s British entity has suffered a succession of setbacks in the last year. After a partner coup saw CEO Sacha Romanovitch replaced in 2018, the firm endured a difficult start to this year. The collapse of Patisserie Valerie sparking a further FRC probe into the firm’s work, while newly installed UK CEO David Dunckley enraged Members of Parliament by telling them the idea that auditors should detect fraud was part of an “expectations gap.” Grant Thornton’s continued role at Sports Direct further damaged the firm’s public image, meanwhile, to the extent that the Daily Mail went as far as to label the auditor a “tainted bean counter.”
This turbulent period seems to have impacted on the firm’s results, as well, to the point where major changes have become necessary to steady the ship. To this end, Grant Thornton in early 2019 announced plans to make 50 to 60 staff redundant as part of a continuing restructuring effort for its operations. Now, the firm seems set to continue its new course with the possible sale of its wealth advisory services branch.
As reported by Sky News, 1825 – the financial advice arm of Standard Life Aberdeen (SLA) – has entered into talks to buy the wing of Grant Thornton, with the firm valuing its wealth division, an Independent Financial Adviser (IFA), at £30 million. According to claims since circulated by the British press, one source said Grant Thornton’s management was exploring the sale of the unit as part of an attempt to distance the firm from potential conflicts of interest, as well as to “streamline its focus.”
The move would see 1825 gain about 100 employees and 30 individual financial advisers to its growing portfolio across the UK. Since its launch four years ago, 1825 has acquired a string of regional wealth management businesses, taking the tally to seven in March this year with the addition of the wealth management arm of BDO Northern Ireland. This boosted assets under advisement by about £230 million to £4.3 billion.
In the wake of proposals from the Competition and Markets Authority (CMA) and from the Kingman review, the accountancy profession in the UK is under increasingly sharp scrutiny. As a result, several of the country’s biggest professional services firms have sought to change their operations in order to avoid state intervention. Earlier in June, PwC said it was investing an extra £30 million to focus more quality in audits, while KPMG announced it would restructure its auditing wing.
Grant Thornton is the sixth-largest accountancy firm in the UK, but has itself been beset by issues that have caught the attention of regulators. Despite this, some analysts question whether this justifies selling its advisory business, particularly considering a “handful” of partners would move across in any deal for its wealth advisory unit, according to Sky News.
