"There is no doubt that my business would be many times bigger if I had moved to London,” says Mark Polson, founder of consultancy firm the Lang Cat.
He notes that while he worked in Edinburgh for many years, the first client of the nascent Lang Cat business was actually based in York.
Polson created the Lang Cat following a number of years working in established Edinburgh financial services firms, and some of the earliest clients were in Edinburgh.
But he says that as he expanded, and in particular when he one division of the company went into financial public relations, he was asked: “How can you talk to the journalists – they are all down in London?”
Polson, who was born and raised in England, did not move the business to London as he prefers the lifestyle in Edinburgh, but acknowledges that this has restricted somewhat the pool of clients available to him.
He adds that while the business might be bigger, it might not necessarily be more profitable due to the higher costs of rent in London relative to Edinburgh.
Ecosystem of providers
Tom Ham is a financial adviser who launched his firm in Edinburgh, Calton Wealth Management.
He says the ecosystem of service providers is ample for him to be able to access all he needs in the city, including the discretionary fund management firm to which he has outsourced the investment management function.
He has expanded the firm beyond Edinburgh and will soon open an office in London, but is comfortable with the idea of his firm being headquartered in Scotland.
Ham says the average portfolio size of clients in Edinburgh tends to be larger than in England, so advice firms with the same number of clients in Edinburgh is likely to have a materially higher turnover than one in England.
Ham adds: “The number of middle class professionals based in and around Edinburgh is great for financial services.
"Clients do tend to have a lot of knowledge, mostly due to the number that have worked in financial services.
"I would say as well that defined benefit transfers are a totally different beast north of the border. I find clients in the South with a £1mn pot would want the conversation to be around how they can spend £150,000 a year, but up here in Scotland they might say they only need £30,000 a year."
When Morningstar acquired Praemium in 2020, it was buying a platform and an investment management business with offices in Edinburgh and London.
Around 50 staff are deployed in Edinburgh, and are mostly deployed on technology products.
Next generation
That the next generation of Edinburgh financial services companies will be based around fintech is the hope of Nicola Anderson, chief executive of Fintech Scotland.
She says one of the reasons for the growth of the sector is that: “There are many people in Edinburgh who work for one of the big insurance companies for maybe 20 years and then they decide they want to do something else, but they have a lot of knowledge.”
