The two businesses will retain their separate brands until later this year and the two firms have come together under the common ownership of Quilter Cheviot Holdings Limited.
The transaction was funded by Quilter's European private equity firm owner Bridgepoint. The terms of the transaction were not disclosed.
Quilter has £8.3bn in funds under management while Cheviot has £4.2bn. The combined business now has total funds under management of more than £12bn.
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This comprises mainly discretionary portfolios run on behalf of private clients, charities, trusts, pensions funds and corporate bodies.
Martin Baines has become chief executive of both businesses and Quilter Cheviot Holdings Limited. Mr Baines was previously chief executive of Quilter. Michael Kerr-Dineen, managing director of Cheviot, is expected to join the holdings board of Quilter Cheviot and act as a senior adviser to the firm.
Quilter, which was first set up as a stockbroking firm in 1771 and was bought by Bridgepoint last year, has almost 400 staff in 13 locations around the UK, Jersey and Ireland.
Cheviot, which was launched in 2006, has 141 staff in London and Liverpool.

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