Citywealth interview: Louise Stoten who ranked in the top twenty women in private wealth in 2008

Louise Stoten, a partner at Payne Hicks Beach, started life in the City in the late 80’s at the tender age of seventeen, working at a private client stock broking firm. Despite learning the business quickly and getting a good grounding in dealing with private client lawyers, she experienced some hard times at first hand. Landing in her job at the time of Black Monday, one of the worse times in the financial history of the City of London, the capital went into a dire recession and eventually her company, unable to sustain their business, closed down. At twenty one she found herself being made redundant.

Not one to miss an opportunity for fun though, she spent her redundancy time wisely, heading off to Italy for the World Cup and coming back only when her redundancy money ran out.

On her return she reviewed the jobs on offer, but the idea of 7am starts on dealing desks didn’t appeal, so she opted for a career change into the law. She had A levels in economics and law and although she says she didn’t realise the magnitude of her decision, she jumped headlong into finding a role to support herself while she studied for her law degree. She applied for paralegal jobs and got some interest but then heard that an assistant had resigned at Beachcroft Stanleys in their private client department working with partner, George Francis, who was previously at Farrers and is an old Etonian, which we both agree was ‘very private client’ in those days. Through a work connection she got an introduction for an interview and with her experience with investments and trusts she says, in her usual honest and open style, she “blagged her way in.” Her studies took a gruelling seven years to complete doing a part time degree and finals in the evenings.

During this time Beachcroft Stanleys were merging with another law firm Wansboroughs who, Louise says, seemed less interested in private client, so the team moved to Payne Hicks Beach in 1997 and they took their clients with them. Following twenty years in the industry, Louise says she now has a wide spectrum of clients that include agricultural and landed estates, onshore and offshore trusts and UHNWi’s and in the last five years, as deals have started to mature, a large influx of private equity and hedge fund money.

Multi generational issues particularly interest Louise. “Some clients preserve their wealth well.” She explains. “I have a couple of clients with big stately homes that are expensive to run, with no natural succession so we’ve looked at merging succession with others in the family. I think splitting family money up is a mistake. It means rather than having one super wealthy family, you suddenly have a handful of less wealthy individuals and what can be achieved with those families reduces. I prefer to keep family money solidly together.”

When dealing with private equity and hedge fund clients, Louise is glad she spent some time working with investments in her early career. “It definitely helps to understand better the areas in which your clients operate, the stresses they are under and to communicate with them on their level as sophisticated investors.”
She explains further. “A family constitution is fine but lawyers should also have an understanding of how to manager money to get a broader picture of clients’ assets and lifestyle.” Clients who have recently acquired wealth, generally have a short term outlook and something she likes to encourage is a thirty to fifty year approach. “Although trusts are a more difficult concept to use now we are looking very seriously at family partnerships, but these may not be flexible enough to work over successive generations.”

Of her client work and trends, private charities are ‘very fashionable’ now. “Everyone wants one.” She says laughing. “It’s a good way to educate young children , especially if they are involved as a charitable trustee. The can learn about investments, tax and meet advisers whilst doing it with money that isn’t theirs.” She mentions one client who has £250million to transfer to a child but will leave a significant proportion to a private charity.

“With the differential between income tax and capital gains tax rates, we are looking closely at OEICs and insurance bonds. Clients with cash from £5million upwards, want to look at solutions with tax wrappers and deferral products. Some may only work if you are planning at some stage; otherwise the deferred tax involved may be large.”

Louise sees a gap in the market for private client lawyers to work with private equity and hedge fund financiers. “The magic circle corporate law firms do the fund works for investors and directors but in many cases there isn’t any ongoing private client support and often the individuals don’t really appreciated their position in a structure and how to plan to extract their profits from it. Many corporate firms don’t have a department to look after day to day individual affairs one they have set up the fund.”

Louise agrees with many in the private wealth sector, that the term family office is vaguely frustrating. “Many private client lawyers acting for a wealthy family would do a lot of the work that a family office might do.” Louise says, “Our work has always revolved around individual clients, offering them a traditional, personal and tailored service. We aren’t transactional , we expect to deal with all of our clients affairs for a long time and hopefully for a number of generations.”

Investment manager selection for clients is also something Louise is involved with but she always advises clients to review their structures and planning first before leaping into investments, which she says sometimes means she locks horns with bankers and investment managers who are eager to sell products. “Most clients don’t really need much of their money, so I ten to plan what we will do with the bulk of their fortune for the next twenty years plus, then look at structures to minimise tax then decide on investment strategy.”

She laments the current trend to hire lawyers in banks. “If you are not very careful they can devalue the lawyer proposition and there may be a prevalent short term investment view which I disagree with. I always look at wealth management over a long time period because clients who have recently acquired wealth rarely appreciated that money, if managed well, has a habit of growing massively and can get out of control without good structuring. Some of the packaged banking products that work now, may not work in a few years time.”

Louise also agrees that clients are getting younger and has a number of thirty something private equity entrepreneurial clients with money coming online as their deals mature. However she likes both old and new money clients and thinks they compliment each other. “Lessons have been learned about how old money has survived and that best practice can now be applied to newer money.” She makes a keen observation. “Old money was once new money and new money usually wants to retain wealth long enough to be old money.”

www.phb.co.uk

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