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Thank goodness brokers and discretionary asset managers don't function like this anymore
14/06/2018 , Ian Orton

A number of private banks and wealth management firms have taken disciplinary action against employees because of alleged “inappropriate behaviour”.

But what would firms or, perhaps more pertinently the “Court of Public Opinion” have made of the working practices and behaviour that was almost a defining characteristic of  “old” City of London institutions prior to 1986’s “Big Bang”? 

Take Buckmaster & Moore (B&M) a London-based medium-sized stockbroking firm acquired by Credit Suisse in 1987, for example.

A pioneer of discretionary asset management thanks to the efforts of Ian Macpherson, a senior partner and an associate of J.M Keynes, a client of the firm, B&M had built a significant private client as well as an institutional investment management business in addition to its stockbroking activities following its establishment at around the turn of the twentieth century.

Over time B&M acquired a number of significant mandates. These included the Provincial Insurance Company, an insurance company owned by the Scott family* as well as a number of Cambridge colleges amongst many others.

Working conditions and practices at B&M just prior to its purchase by Credit Suisse appear to be very different from those that would be tolerated today, at least according to a reminiscence provided by Marcus Padley, an Australian-based private client investment manager and newspaper columnist who worked for the firm during the early 1980s.

Mr Padley’s reminiscence appears to focus on the broking side of the business in the pre-Big Bang early 1980s. Then the London stock-exchange functioned of on a completely basis with membership limited to individuals rather than companies, strict single capacity, i.e. a distinction between brokers and market makers (jobbers) and fixed, rather than negotiated, commissions.

All changed very quickly in the run-up to and the years immediately following 1986’s Big Bang which abolished the restrictive practices associated with the LSE and opened it to new members and a completely different way of doing business. 

“In 1982 brokers had to get to work so early in the morning (8.30am) that every firm offered its employees a full silver-service cooked breakfast before the 9.30am meeting,” says Mr Padley. “The partners had a butler who served theirs in the boardroom. We had to get our own from the buffet table and eat it at 'the long' table.

“Only partners were allowed to smoke cigars or drink spirits in the morning meeting (cigarettes were OK). Everyone smoked. Ashtrays were built into the desks. Everybody drank. Beaujolais nouveau cost the industry a day of productivity a year, if not two. On my first day I drank five pints at lunchtime. Of Pimm’s.

“People slept in the toilets and everyone carried a piece of paper with their address in their suit top pocket, so the taxi drivers knew where to take you when you passed out in the back of the cab. Share prices were displayed on one massive TV screen (28-inch) that sat next to the senior partner's desk. An active stock price would change maybe five times a day. Most didn't change. A four-point move on the FT All Share Index was a volatile day.

“Prices were updated by stock exchange orange buttons who, if they could be bothered, would walk around the stock exchange floor and ask jobbers if anything had changed. The jobbers would create trade by pretending they had. Not a lot of prices changed after lunch.”

Of course the situation could have been different for investment managers or employees at other City brokers and investment management.

But it probably only differed in degree rather than substance.

* Now the main family client of Sandaire 

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