Terry Smith to quit Tullett within weeks

Terry Smith, the colourful chief executive of Tullett Prebon, is planning to quit the brokerage house within the next few weeks to focus on his fund management business instead.

The financier, who is one of the City’s best known characters, is expected to work full time at Fundsmith, the asset management group he started three years ago.

Tullett, which is one of the world’s biggest brokerages, hired Spencer Stuart to find a successor for Mr Smith nine months ago. The company has lined up John Phizackerley, a former banker from Nomura and Lehman Brothers, as a replacement, according to the Financial Times, although the deal has not been signed.

In a statement on Tuesday night, Tullett said it is "currently engaged in a succession planning process, which is well advanced, and that the board has agreed that Terry Smith, chief executive, will stand down once a successor has been appointed."

Mr Smith, who is a regular contributor to The Telegraph, has dominated the London-listed brokerage company during his eight year tenure as chief executive and his departure rattled some analysts. Some feared it was a sign that Mr Smith reckons Tullett, whose revenues have suffered following regulatory pressures and changes, could face even tougher times.

“We believe that Mr Smith is regarded highly by the investment community, so his potential departure will likely be viewed with some trepidation,” said analysts at Shore Capital in a note. “Investors may also worry that this reflects broader concerns by Mr Smith about the future prospects of the company, albeit he has always defended the ongoing importance that interdealer brokers will play in the financial services industry.”

However shares in Tullett rose as traders bet the company could become a takeover target without Mr Smith at the helm. The financier, who owns 4.4pc of Tullett, has been an indomitable figure in the City he wrote a “sell note” on Barclays while working as a young analyst for the bank’s subsidiary BZW.

He was later dismissed as head of research from UBS Philips & Drew when he wrote a book called Accounting for Growth that criticised the accounting practices of the bank’s clients.

As boss of Tullett, which he has led since 2006 when it was demerged from Collins Stewart, Mr Smith has been one of the key combatants in the intense rivalry between inter-dealer brokers, including Icap, BGC Partners, GFI and Tradition. The battles have sometimes ended in court amid claims of poaching staff or bullying.

However, the industry’s reputation has been hard hit by investigations into allegations of rigging of key market rates including Libor. Regulatory changes and lower trading levels by banks have also taken their toll.

Mr Smith has been a strong defender of the industry. However three years ago he started Fundsmith and worked there one day a week.

The company, which has an office in Connecticut too, has grown its flagship fund to £2bn with an annualised return of 16.1pc. Mr Smith set up the company promising it would be run in accordance with Sir John Templeton’s axiom that “If you want to have a better performance than the crowd, you must do things differently from the crowd.”

Last week Fundsmith launched a new emerging markets fund. “The performance of the vast majority of Emerging Markets funds has not kept up with the developed markets over the last five years,” Mr Smith said at the launch. “Our analysis suggests that this is partly as a result of managers investing in poor quality companies and getting the inevitable result.

Tullett declined to comment.