Financial Times - Private Client Wealth Management by Cantab Asset Management

FINANCIAL TIMES Saturday 18 June / Sunday 19 June 2016

Private Client Wealth Management

All in the game — making wealth management fun

How investment companies are introducing gamification’ in an attempt to woo a younger generation of clients — PAGE 4

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An FTMoney Guide

Focus on costs — Page 12 Negative rates blow — Page 6 Concierge services — Page 11

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FINANCIAL TIMES Saturday 18 June 2016

PRIVATE CLIENT WEALTH MANAGEMENT

Wealth managers navigate an uncertain world INTRODUCTION

iversification into hedge f nds and commercial ro erty HUGO GREENHALGH — WEALTH CORRESPONDENT

It has not been a good year for investors. A cocktail of global economic problems dragged down performance for wealth managers in 015, and as uncertainty continues to stalk the markets, more managers are turning to alternative investments in the search for alpha. While not quite the worst performance since our survey began — that dubious honour belongs to 011 — investors in balanced or growth portfolios had little to celebrate last year. According to Wealth- , the data provider and the T’s research partner, the average

balanced portfolio posted returns of just .3 per cent in 015 — down from . per cent the year before. To put this in context, the average balanced portfolio posted returns of 11.3 per cent in 013, and .1 per cent in 01 . Nor has it been a good year for the average growth fund, where returns were 3. per cent — down from 5.1 per cent in 01 , 1 . per cent the year before and 10 per cent in 01 . Many of the problems faced by those managing our money in 015 have persisted into 01 . Worries over the slowdown in China continue, the outlook for the oil price and commodities markets remains uncertain, and more of the world’s central banks have introduced negative rates with 10tn of bonds now also in minus territory. Bill Gross, founder of Pimco

cono ic pro le

a e it a a year or inve tor

and now at Janus Capital, has dubbed the trend in negative rates a “supernova that will explode one day”. On top of this, with just days to go until the UK referendum, is the fear of what a potential Brexit could do to markets. “The uncertainty surrounding the EU referendum in the UK is acting as somewhat of a

—

damper on the market,” says David Saunderson, chief executive of Cantab Asset Management. Others point towards the mixed signals from the US ederal eserve on monetary policy. Investors had hoped the decision to raise interest rates in the US last year would mark the start of a wider turnround,

but hopes of subsequent rises have been quashed. “We think the ed lost the plot around the time of E3,” says Gareth Lewis, chief investment officer at Tilney Bestinvest. “Their natural bias about supporting Wall Street over Main Street is coming back to bite them. They have boxed themselves into a corner over the economy.” But it is not all bad news for investors. elatively speaking, while the returns achieved by wealth managers in 015 were low, they are still in positive territory — unlike the TSE All-World Index. In 015, the index fell by almost per cent, having risen 3 per cent over the previous 1 months. Two stellar calendar years in 01 and 013, in which the index rose both years by approximately 1 per cent, capped a disastrous 1

months in 011 when it fell by just under 10 per cent. Compared with the TSE All-World index, investors have been spared the full impact of wobbles in the global economy. Indeed, with uncertainty rife, fund managers have largely played safe this year and sat on their hands in terms of asset allocation. Since last year’s survey, there has been little movement in the make-up of the vast majority of growth or balanced portfolios. Yet despite the nervousness within the ranks of professionals managing our money, there have been some standout stars note: both top portfolios have not been verified by the report’s performance analyst Asset isk Consultants . London & Capital achieved the top-performing returns on

Performance Returns on averaged balanced portfolio (%) Wealth manager

Over 1 year

ACPI Adam & Co Arbuthnot Latham Barclays Wealth and Investment Management Brewin Dolphin Brooks Macdonald Asset Management C Hoare & Co. Canaccord Genuity Wealth Management Cantab Asset Management Cazenove Capital Management Citi Gold Citi Private Bank Close Brothers Asset Management Coutts Credit Suisse Dart Capital Equilibrium Asset Management GAM Investec Wealth and Investment Investment Quorum JM Finn Killik & Co Kleinwort Benson London & Capital Asset Management McInroy & Wood Quilter Cheviot Rathbones Investment Management Redmayne-Bentley Rothschild Wealth Management Ruffer Sarasin & Partners Saunderson House Limited Seven Investment Management SJP Smith & Williamson Societe Generale Private Banking Hambros Standard Life Wealth Thesis Asset Management Tilney Bestinvest UBS Wealth Management (UK) Vestra Wealth W H Ireland Waverton Investment Management Average Max Min Source: Wealth-X Private Client Wealth Management Survey 2016

“Over 3 years (cum)”

“Over 5 years (cum)”

Returns on average growth portfolio (%) ARC verified

Over 1 year

0.7 3 2.8 3.2 3.55 2.65 0.37 6.8 1.4

18 16.9 19.5 24.2 22.37 18.75 11.71 33.07 16.4

29.8 22.4 23.8 38.9 28.17 26.72 14.54 47.55 26

X X X

0.9 3.06 1.3 0.5 3.62 4.63 1.34 1.5 3.98 2.13

13.45 19.13 16.3 13.96 20.99 25.36 18.85 18.8 18.09 21.75

26.23 19.1 13.93 20.98 34.43 21.34 27.4 29.83 31.83

2.54 0.29

16.78 16.36

24.83 27.53

1.08 2.2 1.61 1.49 -0.1 1.61 2.8 0.27 0.12 1.54 3.24 2.67 6.94 3.8 1.12 4.13 3.35 1.59

18.79 18.1 31.87 22.97 15.6 20.47 23.6 19.13 17.3 16.79 19.3 12.09 33.3 23.8 17.32 20.63 23.83 18.86

27.08 24.6 45.96 28.92 22.5 26.18 32 23.56

X X

26.47 21.5 22 43.86 29.7 24.41 27.04 34.01 22.28

2.30 6.94 -0.10

19.86 33.30 11.71

27.50 47.55 13.93

X X X X X X X X

X X

X X X X X X X X X X X X

“Over 3 years (cum)”

ARC verified

1.6 4.4 1.6 5.74 4.58 3.34 2.88 6.3 1.5 0.4 2.52 2.56 1.4 0.24 6.19 5.57 1.7 1.9 6.5 3.16

23.1 24.9 20.9 39.53 25.65 23.48 28.92 31.32 19.8 19 24.1 20.26 19.3 19.23 28.82 27.54 25.22 22.3 29.86 22.46

35.2 31.1 23.6 55.89 27.95 32.03 35.3 43.44 30.5 32.7 33.27 27 17.7 19.42 31.59 33.43 31.85 30.2 33.61 28.49

X X X

1.37 1.8 2.7 1.99 2.4 4.6 1.99

16.9 29.84 22.2 22.35 22 30.41 27.51

21.43 56.24 32.2 32.08 29.9 46.64 32.23

1.98 3.3 1.17 0.79 2.89 3.03 8.11 7.08 4.7 1.84 6.33 1.92 2.09

23.19 27 25.97 29.7 23.13 23.55 30.42 39.83 26.2 22.5 30.63 26.3 24.11

27.26 X 34.9 X 29.08 X X 31.87 X 23.81 33.53 X 47.95 X 31.2 X 28.84 X 36.6 34.49 X 27.88 X

3.15 8.11 0.24

25.49 39.83 16.90

32.63 56.24 17.70

X X X X

X X X

X X

X X X X X

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FINANCIAL TIMES FINANCIAL SaturdayTIMES 18 JuneSaturday 2016 18 June 2016

PRIVATE PRIVATE CLIENT CLIENT WEALTH WEALTH MANAGEMENT MANAGEMENT

the average growth portfolio, the average growth remains portfolio, a healthy remains 33 a healthy 33 per this area,”percentage he says. point percentage per they’re they’reand, positioned more growthtop portfolios 15 per growth portfolios 15 per top funds in thisfunds area,”inhe says. lower point than lower th positioned more and, posting a five-year of cent, postingreturn a five-year returnwhile of cent, while in 015importantly, returns where “However, there have been the to hedge fun in 015 returns importantly, notseveral centfund for several manag- there cent for manag-fund “However, have been the allocation to allocation hedge funds. they’rewhere not they’re just over 5 just per over cent.5 Over per cent. Over . per achieved plenty of opportunities Yet in it is growing in popular achieved cent. . per cent.trying to take trying to take on increasing according Wealth-of opportunities ers, accordingers, to the Wealth-to theplenty for Yet it isfor growing popularity, on increasing three years, three returns stoodreturns at years, stood at “In general, Cantab prefers long-short equity funds “In general, Cantab prefers levels of leverage.” data. data. long-short equity funds to and nottojustand for not the just sakefor of the sake levels of leverage.” . per cent, . but pershrank cent, but to focusdecisions investment decisions from material differdiversification. to shrank focus investment It is“aggressive not about “aggressive or StJohn Gardner, headfrom of profit material differdiversification. It is not about or StJohn Gardner, head of profit back to 1. per back cent to 1. in per 015,centoninlong-term 015, ontrends long-term trends rather stuff”, ences in stock move-hoping“We’re hoping that comm rather long-short stuff”, heinvestment qualifies, investment managementmanagement at ences inat stock price move-price“We’re that commerlong-short he qualifies, reflecting thereflecting difficult investthe difficult investthan short-term events,” ments globally.” than short-term events,” but but rather returning to the tra- Latham, Arbuthnot the pritheLatham, pri- ments globally.” cial property cial willproperty come outwill thecome out rather returning to the tra- Arbuthnot ment environment. ment environment. explains Mr explains Mr Saunderson, vate bank, recent in The search in for income in [ofother side [of the EU refer Saunderson, ditional notion of a hedge fund recent vate bank, quibbles in quibbles The search for income other side the EU referenditional notion of a hedge fund Looking towards Looking the longer towards the longer we “although we to are careful to hedging press over performance do this rate low-interest environdum] and unafbe largely un “although are careful — namely hedgingtheagainst press overthe performance do this low-interest environ-ratedum] and be largely — namely against term, Iain Tait, term, headIain of the Tait, priheadavoid of the the pri- pitfalls avoidthese the pitfalls drill detail also seen many manby anysays concerns,” s might these risksinvesting faced when not drillin downnot into thedown detailinto of the ment hasofalsoment seen has many manfected by anyfected concerns,” risksmight faced when in investing vate investment vateofficer investment at L&C,officer at L&C, bring.” whatcan hedge funds canagers offer.turn toagers turn to as an ichards, Steven associate ichards, associ bring.” equities and bonds. what hedge funds offer. property as property an Steven equities and bonds. ascribes the ascribes performance the performance to to Increasing volatility on isMr “Ititishas true thata it has been a At alternative. At just director per cent,at Thesis director at Thesis Increasing volatility on in that “It is true been alternative. just per cent, Asset Man- Asset M Mr Lewis notLewis aloneisinnot alone “an outsized“an bet outsized within fixed bet within fixed stock markets means alternative year for real estate remains agement. relatively“We agement. “We feel reasona world stock world markets means favouring stratealternative strate- challenging feel reasonably challenging year for global realglobal estate remains relatively favouring income”. income”. managers de- gies. Allocations macroand strategies there low as of a proportion the aver- comfortable that prices wo managers have sought have to de-sought to hedge that prices won’t strategies there and low as a proportion the aver- ofcomfortable gies.to Allocations to hedge macro “ or L&C, a growth “ or L&C, mandate a growthrisk mandate risk their looking tendlarge to bepopular some large popular balancedone portfolio, one react overnight their portfolios by portfolios looking by funds in both balanced react overnight to an exit.” to an exit.” tend toand be some age balancedageportfolio, funds in both balanced and will still havewill a much still have higher a much higher for elsewhere elsewhere income.fororincome. or proportion of proportion fixed income of fixedsome income of those surveyed in this of thosesome surveyed in this than our peerthan group,” our peer he says. group,” he says. report, that has meant year’s report,year’s that has meant “We tend to be “We more tend comfortato be more hedge comfortafunds. Pilloried for their funds. hedge Pilloried for their ble stretchingble the stretching boundaries the boundaries headline underperformance — headline underperformance — of where we can of where find good we can risk-find billionaire good risk- billionaire investor Steve investor Steve adjusted returns adjusted in returns fixed Cohen in fixed Cohen recently saidrecently he was said he was income we tend income to be we bolder tendinto be“blown bolderaway in “blown away by the lack ofby tal-the lack of taland more confixed incomefixed and income more conent” in the industry — hedge ent” in the industry — hedge servative in equities.”funds still have servative in equities.” funds still have their supporttheir supportA strategycapiof favouring A strategy of favouring ers. capi- ers. tal preservation that Mr Mr However, tal preservation is one that Mris one However, Mr Lewis at Tilney Lewis at Tilney Tait readily be left adds Tait readily admits will beadmits left will Bestinvest Bestinvest a caveat.adds “Pri-a caveat. “Priwhen “animal clients will view hedge behind whenbehind “animal spirits vatespirits clients vate will view hedge reign”, for now, playing funds as anbucket amorphous bucket reign”, but for now, but playing it funds as it an amorphous cautious has paid cautious off. has paid off.of high fees and of high and high volatility highfees volatility Asset Management Cantab AssetCantab Management vehicles,” he investment investment vehicles,” he takes over the honours a fivetakes the honours a five- over “But we’re warns. “Butwarns. we’re trying to trying to period for theinvest average year period year for the average invest in we areas where we have in areas where have balanced portfolio, reasonable recording clarity balanced portfolio, recording reasonable clarity on what’s on what’s returns perandgoing returns of more thanof more per than on, andthe understand the going on, understand cent. The three-year cent. The figure three-year figureandstrategy visibility where strategy visibilityand where

Current asset Current allocation asset allocation of the average of thecapital average capital growth portfolio growthinvested portfolioon invested behalf of on behalf of UK privateUK clients private clients Per cent

Per cent Other 7

Commodities 1Commodities 1 Property 3

Property 3

Cash 4 Corporate bonds 8

Other 7

Privateequity 1Privateequity 1 Hedge funds 4Hedge funds 4 Government Government bonds 5 bonds 5 65

65 Equities

Equities

Source: WealthX Source: WealthX

said positive, it would50be positive, 50 Waiting game Waiting gamesaid it would be per cent replied pernegative cent replied and negative and EU vote will EUhave vote awill have a — reflecting the — reflecting UK’s the UK’s profoundprofound effect effect indecision as aindecision whole — as 47 a whole — 47 per cent said they per cent simply saiddid they simply did When the UK When votes on theJune UK votes not on June know. not know. 23 on whether23toon stay whether in the to stay Many in theare biding Many their aretime. biding their time. European Union, European fund Union, fund Turmoil can provide Turmoilancan provide an managers willmanagers be poisedwill to be poised to opportunity. Steven opportunity. Richards Steven Richards act when markets act when openmarkets the open the Asset at Thesis at Management Thesis Asset Management following morning. following Cashmorning. Cash denies the current denies11 the percurrent cent 11 per cent holdings in theholdings averagein the average cash position cash across position growthacross growth balanced and balanced growth and growth portfolios is aportfolios direct response is a direct response portfolios remain portfolios relatively remain relatively to Brexit. It is to more Brexit. a decision It is more a decision high at 5 per cent high within at 5 per the cent within the by the informed informed “general by the “general average balanced average portfolio. balanced portfolio. feeling that the feeling bull run thatover the bull run over Brexit tops theBrexit list oftops theirthe listthe of past theirsix years the past has run six years its has run its concerns. When concerns. asked by When asked by he says. course”, course”, he says. Wealth-X which Wealth-X event would which eventThe would risk to UKThe equities risk toofUK equities of have the mosthave positive the most or positive or is real, adds Brexit BrexitGareth is real, adds Gareth negative influence negative on their influence on theirat Tilney Lewis Lewis Bestinvest. at Tilney Bestinvest. investment outlook, investment wealth outlook,But wealth the uncertainty But theisuncertainty not is not managers overwhelmingly managers overwhelmingly without benefits. without “In the benefits. “In the said the question said of theBritain question ofmedium Britain term medium we couldterm see we could see leaving the EUleaving was the the EU was sterling the weakness sterling helpweakness help primary worry.primary Just 3 per worry. centJust pockets 3 per cent of thepockets UK market.” of the UK market.”

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FINANCIAL TIMES Saturday 18 June 2016

PRIVATE CLIENT WEALTH MANAGEMENT

Millennials force managers to up their game MILLENNIALS

amification aims to l re a fresh generation of clients AIME WILLIAMS

Wealth managers have a problem — but video games

developers may have the solution. While wealth managers’ average clients are currently aged in their late 50s, 1 per cent of managers say that they are trying to attract much younger ones — the millennials — according to research by Wealth-

for the inancial Times. Those born between 1 0 and 000 are likely to fall under the category of “not rich yet”, but managers recognise that if they are going to attract these clients in the future, they will need to up their game. Global consultancy firm Deloitte recently produced a

report suggesting that millennials are not particularly interested in money: they have “low-to-medium” levels of financial knowledge, so wealth managers need to educate and engage them if they are to ever get their cash. The best way to do this would be online. Millennials

love digital — almost 0 per cent of millennials check their smartphone within 15 minutes of waking. But the problem for wealth managers is that their own technological capabilities are poor. “The wealth management industry is behind the digital curve,” said Denise Co l l i n s o f C i t y A s s e t Management. However, many are thinking harder about the way they engage younger clients. “Gamification” — the act of turning a mundane task into something fun — is being touted by the industry as one solution. Speaking at a forum on millennials held by the Wealth Management Association this month, Ms Collins said games could replace “laborious” client processes like filling out risk appetite questionnaires. This might persuade clients to fill out their forms on time, but games could also solve the millennials’ lack of financial knowledge while also teaching them about the consequences of behaviour. “How do people learn ” asks Paolo Sironi, thought leader at US computer company IBM. “They learn by experience. “If you create a game, you’re going to test out the things that may or may not make you happy, and alter your behaviour in the future.” Mr Sironi, who has written a book on how games could be used in wealth management, said gamification would go a long way to helping the average investor understand how to achieve their aims. “The idea of goal-based investing is not new,” says Mr Sironi. “But there has not always been the technology to help people do it.” Video games should be the key inspiration for creating wealth management games, says Jono Hey, head of user experience at online

investment platform Nutmeg. “Children learn to play highly complex games with no, or very few, instructions — they don’t read a manual before they play, because the game teaches skills and conveys knowledge incrementally. “Done right, you’ve learned new skills in a way that doesn’t feel like work, and that’s rewarding and satisfying,” says Mr Hey. Duncan Macintyre, the UK chief executive of Swiss private bank Lombard Odier says he once designed an old-fashioned board game to help clients decide on their goals. “I created a priorities’ board game,” says Mr Macintyre. “It was a physical board game with quadrants on it, and [clients] would place chips that had the numbers one to nine upside down.” The numbers represented different priorities or goals the clients had, ranging from funding their retirement to paying for their children’s school fees. “During the conversation with advisers, all players would reveal the numbers, and then see each other react to each other’s choices,” says Mr Macintyre. The game would serve as a way of learning about choices and starting a conversation, he adds. Joachim Klement head of thematic research at Credit Suisse Wealth Management, says he is also “very fond” of the idea of using digital games. “One of the benefits of games, or experience-based tests, is that they have the power to elicit the same emotions as when you make an investment in real life,” says Mr Klement. “ illing in a

otional re pon e: ga e replicate real li e eeling

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ou u t can tou retain u t can t retain younger client younger it client a piece it a pie o paper an o opaper e c an art o e c art ut i you giveutt i eyou give t e o et ing tooclick et an ing to click an interact it interact it retain it it retain intere t — intere ic i St — ic i S

L EL L EL

involved ininvolved it,” she in says. paper-basedpaper-based questionnaire questionnaire it,” she says. “It’s about making it fun. just uses the and visual just visual uses the and “It’s about making it fun. We’re but very stuffy it in about it in logical parts logical of the brain, but parts of the brain, We’re about very stuffy the UK.” it doesn’t trigger emotional it doesn’t trigger emotional the UK.” Wealthify alone in responses like anxietylike andanxiety responses and is not Wealthify is its not alone in its social focus. social Another upstart, fear,” he says.fear,” he says. focus. Another upstart, MeetInvest, has designedhas an designed an Credit SuisseCredit said it Suisse is worksaid it is work- MeetInvest, platform modelled onmodelled on ing on updating its updating advisory itsonline ing on advisory online platform “fantasy — football” except — except process to make it more inter-it more process to make inter-football” “fantasy of selecting foot- star footactive, incorporating more instead active, incorporating more instead star of selecting choose theirchoose their behavioural finance. behavioural finance.ballers, users ballers, users investor and investor and Merrill Lynch — the US —favourite Merrill Lynch the USfamous favourite famous “team”. investment bank — has used investment bank —add hasthem usedto their add them to their “team”. can currently gamificationgamification to trigger investo triggerThose inves-they Those they can currently pickfuture include pick Berkshire Hathtor empathy tor withempathy their future with their include Berkshire Hathway’s cliWarren Buffett andBuffett and selves. resh-faced cli- young selves. young resh-faced way’s Warren founder of founder ranklin Templeents can upload entsphotographs can upload photographs of ranklin Templeton Investments Temple-John Templeto see themselves forc- “aged”, to see“aged”, themselves forc- ton John Investments ton. the ton. ing investorsing to investors confront the to confront MeetInvest’s founders —founders — truth that they will onethey daywill one truth that day MeetInvest’s Jacquemai — Jacquemai — need their pension. need their pension. Maria and Michel Maria and Michel used books research But the technological diffi- havediffiBut the technological haveand used books and research papers written by the star by the star culties facedculties by many tradifaced by many tradipapers written investors tional wealthtional managers mean wealth managers meanto produce investorsa version to produce a version of their investment writ- style writthat online tech-savvy that onlinestarttech-savvy startof theirstyle investment ups are racingups ahead. are racing ahead.ten in computer tencode. in computer code. “Youthejust “You can’t just retain Nutmeg’s MrNutmeg’s Hey saysMr theHey says can’t retain with aclients piece of company is looking into company is emulooking younger into emu-clients younger with a piece of paperused and some charts, but ifcharts, but if lating game-like features usedfeatures lating game-like paper and some you give them by social media LinkedIn. bysite social media site LinkedIn. yousomething give themtosomething to click and and interact with it Progress checklists Progress and checklists click and interact with it retains interest,” says Ms Jac- says Ms Jacscores to nudge people into people scores to nudge into retains interest,” quemai. investing could “movecould people“move investing people quemai. “Gaming down the path towards thetowards down the path the is something “Gaming isyou something you the timedo —all online there—isonline there is best outcomes”, Mr Hey. saysdo bestsays outcomes”, Mrall Hey. the time something tosomething touch and to touch and “The same “The with same earning withalways earning always to click on.” to click on.” ‘One of the‘One missions of thewemissionsorwe some, games are justgames one are just one or some, set ourselves setisourselves to is topart of the wider in change in part ofchange the wider Gauthier Gauthier educate theeducate world about the worldcommunication. about communication. Vincent, head of US wealth Vincent, head of US wealth investing and investing feelingand feeling managementmanagement at Deloitte, says at Deloitte, says comfortable comfortable to trust it’ to trust it’ wealth managers must move must move wealth managers towards “constant communitowards “constant communication” with clients. badges forbadges actionsforthat actions that cation” with clients. “You he can sit “You downcan with improve your situation,” improve yourhe situation,” sitan down with an adviser and adviser have a one-hour says. “Companies like itbit, like says. “Companies itbit, and have a one-hour — but then you [the wearable[the fitness tracker], wearable fitnessconversation tracker], conversation — but then you forgotten use these as well.” use these as well.” go home andgohave home and have forgotten half of it,” says MrofVincent. Mr Hey warns going about Mrabout Hey warns going half it,” says“It Mr Vincent. “It doesn’t reallydoesn’t work.” really work.” too far, though: build-“We’re too “We’re far, though: buildBut through But small and freing long-term ing relationships long-term relationships through small and freonline interactions, with our customers and that’s quent with our customers and that’s quent online peointeractions, peocan learnple a lot more about about building trust throughtrustple about building through can learn a lot more about investment, he adds. repeated positive interactions repeated positive interactions investment, he adds. “As an investor be you might be — and that means bugging — andnot that means not bugging “Asyou anmight investor smart,and but you always people through gimmicks and people through gimmicks smart, butneed you to always need to where idea trivialities,” he says. trivialities,” he says. learn. So that’s learn. Sothis that’s where this idea engagement and gamifica-and gamificaWealth managers have also of Wealth managers have also of engagement tion comes picked up some tricks from tricks picked up some from in.” tion comes in.” Aallowhuge amount of time and of time and other social media other sites, socialallowmedia sites, A huge amount resources being invested ing investorsing to connect investorswith to connect with isresources is being invested into howtoto attract thetoclients each other in an attempt each other in to an attempt into how attract the clients butthe thefuture, next chalturn wealth management into of the future, turn wealth management into of but the next challenge will be retaining a party. a party. lenge will bethe retaining the interest of theinterest fickle millennial New onlineNew investment online investment of the fickle millennial they become company Wealthify has used generation company Wealthify has used until generation until they become rich. to rich. principles from Googlefrom to Google principles “When to wealth create “circles” — online chat— online create “circles” chat it comes “When it comes to wealth management, millennials millennials groups where investors groups wherecan investors can management, top priority — priority — share investing goals and aims. share investing goalsshouldn’t and aims. beshouldn’t be top they’re just not wealthy yet,”wealthy yet,” “We’re aiming“We’re for theaiming iPhonefor the iPhone they’re just not Barks,David associ-Barks, associgeneration,”generation,” says Michelle says cautions MichelleDavid cautions ateWealthdirector atate Wealthhis Pearce, co-founder Wealth- of Pearce,ofco-founder director. In at Wealth. In his chasingview, clients in their ify. Ms Pearce comify.says Ms the Pearce says view, the comchasing clients in their 0s could pany wanted investors pany wanted toinvestors to prove 0s more could worthprove more worthwhile.each A lot ofwhile. the wealth man“share the love” “sharewith the each love” with A lot of the wealth managers we speak to we arespeak askingto are asking other. other. agers they can thiscapture this “One mission we mission set our- wehow “One set ourhowcapture they can for the next selves is to educate selves isthe to world educate audience, the world butaudience, but 10 for the next 10 years, they really be need to be about investing feeling and aboutand investing feeling years,need they to really at Generation .” comfortable to trust it andtoget comfortable trustlooking it and get looking at Generation .”

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nvestors Investors learn learn o navigate to navigate minus minus territory territory

markets investors where caninvestors can have no choice have butno to choice own negbut tomarkets own neg-where store their savings store their without savings without ative yield short-dated ative yieldbonds, short-dated bonds, others are actively othersbuying. are actively buying. worrying about worrying volatility. about volatility. 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Instead of being Insteadfew of years being agofew no years one thought ago no onelevel thought that thelevel Bankthat of England the Bank ofultra-low England rates ultra-low are seeping rates arenow seeping central bankscentral will keep banks interwill keep Withinterno consensus With noabout consensus the about the warded forrewarded lending money, for lending markets money, couldmarkets do this.”could do this.” targets for inflation. targets for inflation. through to portfolios. through to German portfolios. German rates low est andrates keeplow buying and keep direction buyingthedirection global economy the global economy estors who investors buy securities who buy securities or central banks, or central negative banks, negative Across the English AcrossChannel, the Englishpension Channel,funds pension are warning funds areest warning that prices and that of prices is headed of there is headed is scope there for ais scope for a h sub-zerowith yields sub-zero and hold yieldsrates and hold are a deliberate rates are aploy deliberate to theploy environment to the environment is even more is even they more may have they to cut maybenefits, have to cutbonds, benefits,and bonds, rated highly bonds rated will keep bonds repeat will keep performance repeat performance this year. this year. m to maturity themmust to maturity pay for must prod paybanks for into prodlending banks into and lending extreme. and Inextreme. Switzerland, In Switzerland, while Blackwhile ock, Black the asset ock, highly the asset on yields falling,onsays falling, Salman says Salman privilege.the Yetprivilege. in two years, Yet in two consumers years, into consumers spending intoin spending where the in Swiss where National the Swiss BankNational manager, Banksays manager, negativesays yields negative Ahmed, Odier Ahmed, Investment Odier InvestmentFT.com/video FT.com/video s warped asset this warped class hasasset bal- class a bid has to bal-kickstart a bid growth. to kickstart growth. has a deposithas ratea of deposit -0. 5 per rate ofare -0.a 5key perrisk are facing a key savers. risk facing savers. Managers’ Global ixed Global ixedPunk FT — Negative ned from almost loonednothing from almost to nothing But fortoinvestors, But for theinvestors, distor- the cent, distoryields cent, on government yields on government “It begs the questions, “It begs the what questions, what Managers’ Punk FT — Negative Income Strategist. Income Strategist. re than 10tn. more than 10tn. tions have come tions at have a price. come at a price. bonds are negative bonds are outnegative to 0 isout thetolowest 0 isyield the that lowest invesyield that invesrates defy gravity, ratesa defy gravity, a How long willHow this last long will this last or wealth managers or wealthand managers In the andUK, yields In theonUK, benchyields on years. benchIn Europe, years.which In Europe, has a which tors has willabuytors at will ” said buy Suki at ” said Suki cartoon explainer cartoon explainer Government bond markets bond markets ir clients their the “new clients abnorthe “new mark abnor10-year mark government 10-year government deposit rate deposit of -0. per ratecent, of -0. Mann, per cent, credit Mann, analystcredit at UBS. analyst atGovernment UBS. considered areliquid, considered reliable liquid, reliable l” in globalmal” bondinmarkets global bond is markets bonds —isa mainstay bonds —ofainvestmainstaythe of investyield onthe benchmark yield on benchmark 10Yet 10while some Yet while investors some are investors

vestmentInvestment allocation allocation

alth managerWealth manager

Current asset allocation Currentofasset the average allocation balanced of the average portfoliobalanced investedportfolio on behalfinvested of UK private on behalf clients of UK (%)private clients Current (%)asset allocation Currentofasset the average allocation capital of thegrowth average portfolio capital invested growth portfolio on behalfinvested of UK private on behalf clients of UK (%)private clients (%) Cash Equities Bonds: Cash Equities Bonds:Bonds: Property Bonds: PrivateProperty Hedge Private Funds Commodities Hedge Funds Other Commodities Cash Other Corporate Government Corporate Government Equity Equity 0 0 0 0

0 6 0 0 0 15 2 14

0 0 0 0 7 2

4.5 0 0 6 6 0 0 14.29 0 0 0 0 10 0 0 6.3 7.5 0 0 0 0 0 16 0 1.04 1.39 0 4.3 7 0 3 11.7 0 7.5 11.25 0 15 0 0 0 15.96 0 7.5 8 0 5 0 0 0 0 0 4 4 0 0 0 0 0 0 0 0 0 0 9 0 5 2 0 0 5 0 0 0 15.6 0 0 0.8 0 0 2.21.5 8 0 0 2.2 03.7 9.7 4.4 0 6 6 0 0 0 0

0 0 0 6 14.29 0 0 0 0 0 2.87.5 0 0 0 16 1.39 0.79 3.1 7 5.211.7 11.25 0 0 0 15.96 0 0 8 0 0 0 0 0 4 5 0 0 0 0 0 0 0 3 0 0 0 15.6 0 40.8 02.2 0 0 3 0 3.64.4 0 6 0 0

0 0 81.5 15 0 0 0 0 0 3.5 0 9.5 0

16.02 3.58 9.850.27 3.58 4.72 0.27 rage (mean) Average (mean) 5.35 47.71 5.3516.02 47.71 9.85 Max 50.00 15.00 35.005.00 15.00 16.00 5.00 x 14.60 75.00 14.60 50.0075.00 35.00 Min 0 0 0 0 0 0 0 0 0 0 0 0 0 Private Client Wealth Management Survey 2016 ce: Wealth-X Source: Private Wealth-X Client Wealth Management Survey 2016

ACPI PI 11 33 Adam & Co m & Co 2 52 Arbuthnot Latham uthnot Latham 0 45 clays Wealth and Barclays Investment WealthManand Investment 8 Man- 53 ment agement win Dolphin Brewin Dolphin 3 54 oks MacdonaldBrooks AssetMacdonald Management Asset Management 4 63 oare & Co. C Hoare & Co. 9.15 43.25 accord Genuity Canaccord Wealth Management Genuity Wealth Management 3.39 56.96 tab Asset Management Cantab Asset Management 0 55 Capital Management5 enove CapitalCazenove Management 43.2 Citi Gold Gold 0 45 Private Bank Citi Private Bank 2.8 55.5 CloseManagement Brothers Asset Management se Brothers Asset 7.19 58.88 Coutts tts 0.8 59.7 Credit Suisse dit Suisse 4.8 43.5 Dart Capital t Capital 1 57 Asset Management5 ilibrium AssetEquilibrium Management 35 GAM M 4.41 46.82 Investec Wealth and Investment estec Wealth and Investment 8 39 Investment Quorum estment Quorum 2 23 JM Finn Finn 0 0 Killik & Co k & Co 3 75 nwort BensonKleinwort Benson 13 50 & Capital Asset Management don & CapitalLondon Asset Management 2 55 nroy & Wood McInroy & Wood 0 0 ter Cheviot Quilter Cheviot 2.5 68.5 Rathbones Investment Management hbones Investment Management 8.5 37.5 Redmayne-Bentley mayne-Bentley 5 70 Wealth Management hschild WealthRothschild Management 7.9 59.1 Ruffer ffer 14.6 38.3 asin & PartnersSarasin & Partners 5 42.4 Saunderson nderson House Limited House Limited 10 55 Investment Management en InvestmentSeven Management 11.3 46.7 SJP 6.4 46.7 Smith & Williamson th & Williamson 8 55 iete Generale Societe Private Generale Banking Private Banking 3 65 Hambros mbros Standard Life Wealth ndard Life Wealth 1 47.6 Thesis Asset Management 9.16 43.44 sis Asset Management ey BestinvestTilney Bestinvest 10 45 UBS Wealth S Wealth Management (UK)Management (UK)5 49 tra Wealth Vestra Wealth 6 34 W H Ireland H Ireland 7 62.5 Waverton Investment Management verton Investment Management 10 44

11 50 2 25 0 35 8 5

33 52 45 53

50 25 35 5

0 4 5 1

3 14 54 16 14 4 11 63 0 11 9.15 5.1143.25 28.2 5.11 3.3915.44 56.96 10.46 15.44 0 25 55 0 25 5 11.2 43.2 12.711.2 0 26 45 15 26 2.8 9 55.5 12.4 9 7.1917.4258.88 5.58 17.42 0.814.8 59.7 10.314.8 4.824.7 43.5 2.624.7 117.25 57 617.25 5 12 35 3 12 4.4125.646.82 025.6 8 7 39 28.5 7 2 15 23 35 15 0 0 0 0 0 3 14 75 0 14 13 12 50 20 12 2 43 55 0 43 0 0 0 0 0 2.5 3 68.5 12 3 8.5 11 37.5 21 11 5 15 70 0 15 7.9 2.1 59.1 15.1 2.1 14.6 0 38.3 30.3 0 5 19.9 42.4 23.319.9 10 19 55 8 19 11.3 16.8 46.7 5.616.8 6.4 27.7 46.7 1.527.7 8 15 55 10 15 3 8 65 4 8

4.5 6 0 0 10 6.3 0 0 1.04 4.3 3 7.5 15 0 7.5 5 0 4 0 0 0 9 2 5 0 0 0 8 2.2 9.7 6 0

16 0 0 0 28.2 0 10.46 0 0 0 12.7 0 15 0 12.4 0 5.58 0 10.3 0 2.6 0 6 0 3 0 0 0 28.5 0 35 0 0 0 0 0 20 0 0 0 0 0 12 5 21 0 0 0 15.1 0 30.3 0 23.3 1.5 8 0 5.6 3.7 1.5 0 10 0 4 0

0 8.5 7 0 5 5.5 2

0 0 0 1.5 14 0 18 0 18 0 0 0 10 0

1 15.8 47.6 9.16 2543.44 10 7 45 5 28 49 6 15 34 7 14 62.5 10 12 44

0 17 0 10

015.8 0 25 14 7 18 28 18 15 0 14 10 12

0 17 0 10

0 0 0 0

0 4 5 1

0 8.5 7 0 5 5.5 2

6 0 15 14

EquitiesCash Bonds: Equities Bonds: Bonds: Property Bonds:PrivateProperty Hedge Funds PrivateCommodities Hedge Funds Commodities Other Corporate Government Corporate Government Equity Equity 37 78 0 68 7 73

0 50 37 2 10 78 0 12 68 3 1 73

13 0 00 15 0 80

013 00 015 28

8.5 0 10 0 0 13.75 0 10 0 11.32.8 14 0 4.3 0 0.79 7.71 3.1 4.55.2 0 30 0 7.21 0 2 0 20 0 0 0 5 0 0 0 17 3 5 0 0.2 0 12 4 5.7 0 0 10.7 3 3.6 0 20 0

2 8.5 79 3 10 83 9.6 57.61 2.8613.75 77.12 0 10 65 2.6 11.3 63.9 0 14 72 0 4.3 71.5 7.1 7.71 79.8 0.7 82.8 1.9 4.5 64.8 1 68.5 4 30 70 3.19 7.2174.79 5 2 65 10 20 50 0 0 2.5 87 9 71 2 85 1 60 9 64 3 17 67 0 5 80 13.1 0.2 69.6 0 12 0 6 5.7 61 7 66 5.8 10.7 65.3 8.5 60.4 7.5 66 2 20 86

2 4 79 3 2 83 9.6 4.31 57.61 2.86 2.7 77.12 0 15 65 2.6 6 63.9 0 10 72 0 4 71.5 7.1 4.84 79.8 0.7 6.1 82.8 1.9 7.3 64.8 1 11.5 68.5 4 3 70 3.1913.2874.79 5 4 65 10 6 50 0 0 0 2.5 0 87 9 7 71 2 13 85 1 0 60 9 1.5 64 3 6 67 0 10 80 13.1 0 69.6 0 0 0 6 11.5 61 7 13 66 5.8 9.4 65.3 8.5 24.6 60.4 7.5 8 66 2 2 86

3 00 4 40 0 12.93 0 0 00 10 00 3.1 6.3 0 0 00 0 18 0 0.72 0.57 0 4 4.1 0 3 11.4 0 6.25 6.75 0 3 00 0 8.74 0 5.5 60 7 00 0 00 0 52.5 0 00 0 00 0 00 6 60 2 00 5 00 0 17.1 0 0 00 0 2.80.4 8 00 3 04.4 0 6.5 0 5 7.5 0 0 00

00 04 00 00 50 6.3 2 00 018 0.57 1.01 4.1 2.3 11.4 5.1 6.75 0 00 8.74 0 06 00 00 35 50 00 00 06 00 00 17.1 0 00 2.8 0 00 20 6.5 0 7.5 0 00

0 0 0 8 2 15 0 0 0 0 53.5 39.5

35.6 0 4.4 0 2 0 22 0 2.5 5 9.5 3

1.72 35.6 76.9 11.31 4.455.94 8 55 5 68 5 22 51 4.75 2.5 73 13.5 9.5 58

1.7210.47 76.9 11.31 1455.94 8 6 55 5 17 68 5 10 51 4.75 6 73 13.5 7.6 58

1.4 5 5 0 5 2.25 2

00 8.252.5 14 0 00 00 90 4.8 0

00 8.25 0 214 00 00 59 4.8 3

4.72 0.99 16.00 5.20 0 0

0.99 10.92 5.20 35.60 0 0

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4.25 0.87 18.00 5.10 00

0 2 0 3

0 50 7 10 0 12 0 1

0 3 5 7

0 7 0 0

0 0 0 0

3.5 4 3 3.5 0 0 2 4 0 0 15.554.31 0 15.55 12.93 4.37 2.7 0 4.37 0 0 15 10 0 0 7.9 0 7.9 6 3.1 0 0 0 10 0 5 0 5 4 0 2.384.84 0.72 2.38 0 0 0 0 6.1 4 2.6 7.3 3 2.6 0 6 0 6 11.5 6.25 0 0 0 3 3 0 0 013.28 0 12.5 4 5.5 12.5 0 15 0 15 6 7 0 0 0 0 0 02.5 0 0 0 8 0 8 7 0 0 0 0 13 0 39 0 39 0 0 13.5 1.5 6 13.5 0 10 0 10 6 2 0 0 0 10 5 0 0 0 0 0 0 0 0 0 0 130.4 13 11.5 0 6 0 6 13 8 1.6 9.4 3 1.64.4 0 0 024.6 0 6 0 6 8 5 0 0 0 2 0 10.47 1.4 3.3 0 14 5 10 6 5 10 17 0 8 10 5 0 6 2.25 6.4 7.6 2

3.3 0 02.5 10 0 10 0 8 0 0 0 6.4 0

0 3 5 7

0 6 8.5 4 12.95 5 8.2 18 1.5 3.58 3.9 20 0 2 12

12 5 0.2 5.3 8.5

Other 0 0 0 2

0 0 0 0 5 2 0 0 1.01 2.3 5.1 0 0 0 0 0 0 3 5 0 0 0 0 0 0 0 0 0 2 0 0 0

0 6 8.5 4 12.95 5 8.2 18 1.5 3.58 3.9 20 0 2 12

12 5 0.2 5.3 8.5

0 0 2 0 0 5 3

6.21 3

7.26 0.87 21.00 5.10 0 0

7.26 21.00 0

6.21 3

21 4.7

FTMoney | 7

FINANCIAL TIMES Saturday 18 June 2016

PRIVATE CLIENT WEALTH MANAGEMENT

Robot or human: which is best for your wealth? ONLINE

ritics estion the ality of online services in a downt rn AIME WILLIAMS

The robots are here to stay as far as the wealth management industry is concerned, but should you use one instead of a human Online discretionary investment services — known as “robo-advisers” — began launching in 01 , hoping to disrupt the traditional face-toface wealth managers by offering a low-cost service to techsavvy investors. So how do they differ While traditional wealth managers usually offer either investment advice or discretionary management — where the wealth manager will invest on behalf of the client — roboadvisers sit in between. Although all online platforms are all slightly different, they normally work by assessing the client’s risk appetite before offering a model portfolio to suit them. More often than not, the portfolio will be made up of cheaper passive funds — as is the case with Nutmeg, the online wealth manager. Lower costs might be the first reason a customer would choose a robo-adviser over a more traditional face-to-face manager — they have what Lee Goggin, co-founder of findawealthmanager.com, calls “a low-cost mantra”. ollowing a change to UK financial regulations in 013, many wealth managers have been forced to raise the minimum investment required for their services, effectively closing the door on less wealthy clients. ather than reject them, using technology to provide a cheaper no-frills service is of obvious appeal. Investec Wealth, which is set

ealt

anager

to launch a robo-advice platform later this year, is playing to this theme. Jane Warren, chief executive of Investec’s online arm, said robots will give people with less money the chance to invest. or its robo service, the company will lower its minimum investment to 10,000, which it describes as “significantly lower” than its face-to-face service. “It’s lower cost, more convenient and we are taking a lower minimum investment,” says Ms Warren. But Mr Goggin says customers should still keep an eye on the fees charged by their platforms. Transaction fees, fund fees, custody fees, brokerage fees — to name a few — are all likely to be present. When using a traditional wealth manager, customers should check whether the costs are negotiable, says Mr Goggin. “Customers should be prepared to be less English and haggle a better deal, especially if they have a large portfolio,” he says. “Negotiating fees at the outset could make a big difference to returns in the long run.” Janine Menasakanian, head of wealth for Vanguard’s UK business, agrees: “ emember that the more pounds you spend on charges, the less you keep in your pocket,” she cautions. If you were to take the pure robo-advice option, it may help to think about how nervous you are likely to be in the event of a market downturn. “What happens in a severe bear market ” asks Joachim Klement, head of research at Credit Suisse Wealth Management. “That’s when investors often need a lot of hand holding, and [online platforms] don’t necessarily have that comfort and explanation that a human adviser could give.” Human wealth managers can also help their clients get

ave a opte ro o ervice

— iStock

their investing right from the beginning by questioning whether they really mean what they say. “Something a good adviser can do that no machine can is sense your emotions and what you are saying between the lines,” says Mr Klement. “Whether you’re a bit inse-

cure, or too aggressive or optimistic — a trusted adviser can give you a confidence boost or bring you back down to earth, and it is not something a machine can do.” Would-be wealth management clients also need to consider whether their needs are simple or more complicated,

says Jane Sydenham, investment director at wealth manager athbones. athbones does not offer robo-advice, but Ms Sydenham says the company believed robo could be “very effective” for “relatively new investors whose circumstances are straightforward”.

or people with “quirks”, such as existing funds with large capital gains, share options, or non-standard tax affairs, seeing someone faceto-face may be better, she says. If it is still unclear, remember it should be possible to combine robo-advice with face-to-face meetings.

FTMoney 8 | FTMoney

FINANCIAL TIMES SaturdayTIMES 18 JuneSaturday 2016 18 June 2016 FINANCIAL

PRIVATE CLIENT WEALTH MANAGEMENT PRIVATE CLIENT WEALTH MANAGEMENT

ents, assets and fees Clients, assets and fees

m & Co

Adam & Co

uthnot LathamArbuthnot Latham

0.73 1.13 0.88 £2,000.00 500 1 0 01.255001.25 01.251.251.251.251.131.250.881.25 0.73

50 400 0

501.254001.25

500 0500250

oks MacdonaldBrooks Asset Management 2.5 Macdonald Asset Management

200 2.5

C Hoare & Co.

150 0

0 1000

accord GenuityCanaccord Wealth Management 1 100 Genuity Wealth Management

tab Asset Management Cantab Asset Management

500

0.95-0.5 1.251.251.131.251.081.25 1.13

0.752000.75

0 1000

1 0.6-1 1

1.25 100 1100100 1.5100 1.5100 1.5 1.5 1.5 1.5 1.5 1.51.25 1.5

500 0

£5,000.00

1.08 0.95-0.5

Available £250Available per £20£250 per trade on per 500.751500.75 0.750.750.750.75 0.60.750.380.75 0.6on 0.38 request 0.5 0.6 0.750.750.750.75 0.60.75 0.50.75

500

1 1.5

£20 per trade

1 0.6-1

Citi Gold

Private Bank Citi Private Bank

150

Coutts

dit Suisse

Credit Suisse

Capital

Dart Capital

1000.6 2000 1000

1.25 1.25

150

1100

250

250 0

250

librium Asset Management Equilibrium Asset Management 0

100

100 0

100 1.5100 1.5

GAM

1 1

11 1

0.60.6 0.90.6 0.90.6

1 0.9

0.9

0.7 1.2 1.2

1.2

0.9 3000 3000 0.9 3000 3000 3000 3000 0

1 1

2000 0.6 1000 0.6

1250

1 1

1.2 1 1

1 1

1.5 1.51.25 1.5

1.2

0.75 1 0.88 1 1

1 1.5

160

1200.38

0.5 0.75 100 0 01000.751000.75 00.750.750.750.750.750.75 0.50.75

stment Quorum Investment Quorum

Finn

JM Finn

k & Co

Killik & Co

nwort Benson Kleinwort Benson

100

0.3

ter Cheviot

Quilter Cheviot

83.5 0.2

200

hbones Investment Management 1.2 100 Rathbones Investment Management

mayne-BentleyRedmayne-Bentley

hschild Wealth Rothschild Management Wealth Management 14

Ruffer

sin & PartnersSarasin & Partners

nderson HouseSaunderson Limited House Limited

SJP

sis Asset Management Thesis Asset Management

ey Bestinvest Tilney Bestinvest

Vestra Wealth

Ireland

W H Ireland

1.5

1 1.5

750 25

750

25083.5

1250

1 1

200 0.2200200

1200

1 1

1 1 0.5 1 0.3 0.31

0.5

100 1.2

1.25

100 1.2100 1.2

0.85 11.25

1 1

0.62 0.81 1.1 1.20.99 1.20.81 1.1 0.70.99

Y Y

Dealing orYexecution charges (broker- charges (brokerDealing or execution age) is charged at age) 0.6%,isbut is dealat 0.6%, but is deal charged dependent dependent £40 per transaction Y £40 per transaction Charities charged 0.25% Charities charged 0.25%

N/A

None

N/A

None

£750 per 1.2 0.7 quarter

£750 per quarter

£1,250.00 1 0.47-0.8

None £1,250.00

NA 0.5 0.5

Underlying managers Y NA Underlying managers

£1,500.00 0.925 1.04

35.00 BAC £1,500.00

£20 per transaction to 0.75% overdown £2.5m N/A £20 per transaction Tiered; 1.25% downTiered; 1.25% to 0.75% over £2.5m

1% on firstY£15k and1%0.5% on balance Financial planning Financial charged separately on first £15k and 0.5% on balance planning charged separately

N/A

All-inclusive in management feein management £1m or more N/A All-inclusive fee by negotiation £1m or more by negotiation

1 0.85

N/A

Passed through at Passed cost through at cost Min commission £40 Y Min commission £40

May be applicable in certain fee Y May be applicable in certain fee structures structures Nil Tiered; 1% up to £500k, dropping 0.6% dropping to 0.6% Y Nil Tiered; 1% up toto£500k, above £1m above £1m 1.75% on 1st £10,000; 0.5% on the next; Sliding scale from 1.05% Y 1.75% on 1st £10,000; 0.5% on the next; Sliding scale from 1.05% £10,000 - £10 contract charge £10,000 - £10 contract charge None Y None

quarter tion £6,000 1 0.85

£2000 0.3 0.3pa No 0.7 0.62

£2000 pa None No

1 10.96 0.87 1 at £5m 1 0.96 0.87 at £5m

1000 35.54

150 1 100

erton Investment Management 12.48 Waverton Investment Management

None

Y FX transactions Y 0

Y Y

(0.4-1) 0.76 0.55-0.66

0.03 0.08 0.06 £40 +0.03 VAT 0.170.250.080.250.060.17

Fund and VAT Y £40costs + VAT Fund costs and VAT

N/A

Ruffer doesY not charge to Discounted to 0.2% +VAT in own unit trusts. Ruffercommission does not charge commission to Discounted to 0.2% +VAT in own unit trusts. clients but does pass on market dealabove £2m Tiered above £2m clients but does passTiered on market dealing charges at costing charges at cost Nil Y Nil There is noYadditional dealing charge Tiered; up toTiered; £2m, drops overdrops to 0.5% over There is no additional dealing1.25% charge 1.25%toup0.5% to £2m, for UK-based assets. assets assets. £10m forFor UK-based For assets £10m deemed “non-UK” deemed there is a“non-UK” £10 there is a £10 transaction chargetransaction charge Nil Y Nil

By agree1 10.75 1 0.5 1 0.75 0.5

N/A No dealingN/A commissions; fee only Tiered; £1m, drops overdrops to 0.7% over By agreeNo dealing commissions; fee 1.25% only up toTiered; 1.25%toup0.7% to £1m, ment £5m ment £5m 0.53 Custody and dealing charges Y Dealing commission 4% for fixed 0 4 0 0 0.8 0 0.8 0 0.80.8 0.80.8 0.80.80.650.8 0.8 0.65 0.53 Custody and dealing charges Y Dealing commission - 4% for fixed interest; 0.6% for allinterest; other investments; 0.6% for all other investments; minimum £40 transaction charge; £50 minimum £40 transaction charge; £50 on transaction in overseas holdings on transaction in overseas holdings N/A 1.5 1.5 1.5 1.5 1.5 1.51.25 1.5 1 1.5 1.25 £7,500.00 £7,500.00 N/A 10 1

35.54

1100

Commission

quarter £6,000

1 1

100 0

Tiered; 1.25%-1.0%.Tiered; May incur initial/ongoing 1.25%-1.0%. May incur initial/ongoing advice fees advice fees

Not applicable, in feesas included Tiered;in1.25% to 0.5%1.25% overdown £10m to 0.5% over £10m Y as included Not applicable, fees downTiered;

1 1

2000.25 0.25

N/A

35.00 BAC

Variable 0.5%-1% depending on size.depending Min Variable 0.5%-1% on size. Min £600 £600 Depends on mandate; enquire Depends on mandate; enquire

Y Commission £750.00

1500

None

0.5 0.5

500 60.4

200 85

Notes

60.4

7501.251001.25

Notes

0.05%

1 1

100 0

Dealing costs (where disclosed)

N/A

1 1

750

Tiered; 0.75% on 1stTiered; £3m, dropping 0.75% on to 1st0.5% £3m, dropping to 0.5% above £5m above £5m

On average, chargesbrokerage are Y brokerage On average, charges are 0.04% per year. 0.04% per year.

1 1

(0.4-1) 0.55-0.66 1.131.251.061.250.861.130.761.06 0.86

N/A

0.05%

N/A

1250

1 1

N/A

By negotiapernegotia- £250 per 1 0.751.25 0.5 1 0.50.75 0.5 0.5 0.5 £250 0.5 By tion 1 0.85 1

First £10,000 £10,000-£250,000 Y - 1%; First £10,000 - 1%; £10,000-£250,000 0.15%; thereafter - 0.11% 0.15%; thereafter - 0.11%

250 41.25

Wealth Management (UK)Management (UK) 17.36 1000 UBS Wealth

ra Wealth

01.25100

As above

N/A

41.25

ete Generale Private Hambros 10Hambros SocieteBanking Generale Private Banking

dard Life Wealth Standard Life Wealth

100 0

Nil

N/A

By negotia50 50 0 0 500.85 500.85 00.850.850.850.850.850.850.850.85 0.85 0.85 By negotiation tion From 1 No From 1 FX No transactions 5000 14 5000

en Investment Seven Management Investment Management 85

h & WilliamsonSmith & Williamson

0.925 1.251.041.25

N/A

0.47 0.63 0.55 £750.00 0 0.3 0 00.75 00.75 00.750.750.750.750.630.750.550.75 0.47

17 1000 1000 17 1000 1000

don & Capital Asset Management 25 London & Capital Asset Management

nroy & Wood McInroy & Wood

1.251.251.251.25

0.5

stec Wealth and Investment 0.38 Investec Wealth and Investment

As above Y

N/A

1 0.88 0.75

0.47-0.8 1 11.25

30 2000 2000 30 2000 0 0 0 0 0 0 0 0 0.5 0 0.5 0.5 2000 0 1601.251201.25

Dealing charges included in theare included Dependsinonthe mandate, startson at mandate, 0.75% starts at 0.75% N/A are Dealing charges Depends management fee management fee Transaction charge:Transaction £30 per charge: Y £30 per Transaction £30 per transacFeeper onlytransactariff inclusive of dealing and transY charge:Transaction charge: £30 Fee only tariff inclusive of dealing and transtransaction tion; overseas dealing £50dealing per action charges transaction tion;charge: overseas charge: £50 per action charges transaction transaction N/A N/A N/A N/A

0 3500 5000 0 3500 5000

e Brothers Asset Management 0.6 Close Brothers Asset Management

tts

0150150

Nil

N/A

enove Capital Management Cazenove Capital Management 6 1000 1000 1000 6 1000 1000 1000

Gold

quarter request quarter Initial charge - Dealing Initialcharges charge - Dealing charges Y 0.5 0.5 negotiable negotiable

0.50%0.75 0.75 0.50% 0.75 0.75 0.750.750.750.75

500

N/A

Tiered structure; 1.25% down to 0.5%1.25% above Tiered structure; down to 0.5% above £10m £10m Actual costYpassedActual to client with no to client with no cost passed margin added margin added Nil (exceptN/A execution-only) Nil (except execution-only)

Actual dealing costs Y £2,000.00 Actual dealing costs

0.88 1.06 0.96 £5,000.00 1.251.251.251.251.061.250.961.25 0.88

5001.255001.25

Clean share classes?

Additional charges (£)

Additional charges (£) Minimum fee (£)

£5m

3.1

lays Wealth and Investment Manage0 250 Barclays Wealth and Investment Managet ment win Dolphin Brewin Dolphin 0 50

oare & Co.

£3m Minimum fee (£)

Discretionary % of discretionary funds invested in in-house funds Execution only Advisory £100,000 Discretionary £250,000 Execution only £500,000 £100,000 £1m £250,000 £2m £500,000 £3m £1m £5m £2m

3.1

Dealing costs (where disclosed)

ACPI

Min. portfolio Annual fee tariff (%) size £k Annual fee tariff (%)

Clean share classes?

% of discretionary funds invested in in-house funds Advisory

Wealth manager

Min. portfolio size £k

250 11

1000 1.2150 1.2 100

2501.25

500 17.36 1000

500

500 0

500

1500

100

1100

500 12.48

500

ce: Wealth-X Private Wealth Management Survey 2016 Source:Client Wealth-X Private Client Wealth Management Survey 2016

1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2

1.13

1 1

11.250.881.13

1 1

1.2

By1 negotia0.88 tion

11 1

£2,000.00 1.2 1.2

Y Y

£0

£2,000.00

By negotia-VAT tion

No chargeYlevied for is part Nodealing. charge Itlevied for dealing. It is part of the overall service andoverall included of the service and included within the AMC within the AMC Included inYour annual management only; charged per hour Included in our annualAdvisory management Advisory only; charged per hour fee. No additional dealing charges dealing charges fee. No additional £15 bargainY charge£15 bargain charge Custody charges apply: 0.15%-0.2% Custody charges apply: 0.15%-0.2%

VAT

£0

For portfolios of less N/A thanSee Q11 N/A Discounts may apply Forthan portfolios of less See Q11 Discounts may apply £1,000,000 contract fees will be £1,000,000 contract fees will be charged (£30 per UK bargain and charged (£30 per UK bargain and £50 per overseas bargain). VAT £50 per overseas bargain). VAT will be applied where willapplicable. be applied where applicable. Fees £1,000 Y Fee with noY commission - 0% and 0.3%- 0% overfees £70m 1 1 1 10.75 0.67 Fees are Transaction £1,000 - £17.50 Transaction - £17.50 Fee with nofees commission and 0.3% over £70m 1 1 are 0.75 0.67 negotiable commission. Equity-type transactions: negotiable commission. Equity-type transactions: first £10,000 - 1.95%; next £15,000 first £10,000 - 1.95%; next £15,000 0.5%; excess - 0.3%0.5%; excess - 0.3% 0.88 N/A Up to 0.15%N/A per equity 1.2 1.2 1 1.20.93 1.2 Up totransaction 0.15% per equity transaction 1 0.93 0.88

FTMoney | 9

FINANCIAL TIMES Saturday 18 June 2016

PRIVATE CLIENT WEALTH MANAGEMENT

Bigger seems to be better for wealthy clients MERGERS

anagement gro s have consolidated over recent years DAVID BARKS

This year’s survey of leading wealth managers in the UK reveals a significant growth in the average number of clients at each wealth manager over the past three years. In that time, advisory assets under management AUM have grown 0 per cent. or the past seven years, Wealth- Custom esearch has partnered with the inancial Times to inform readers of changes in and performance of the UK’s wealth management industry. This year we received responses from 3 wealth managers, including eight of the 10 largest in the market. Two years ago, our analysis found the typical UK wealth manager had about 1 , 00 clients today they have 1 ,100 — a 30 per cent increase. Over the same period, the average discretionary AUM a wealth manager controls has barely changed . bn in 01 , rising to 5.1bn in 01 , whereas average advisory AUM has grown from .1bn in 01 to 3. bn in 01 . In our view, there could be a number of reasons for these changes including: 3 Increased pension freedoms at retirement have meant more wealthy people seeking advice on their options 3 Additional costs from the retail distribution review D , which added to regulation of the sector, have driven mergers and acquisitions of small wealth managers. New pension freedoms have also given wealthy baby boomers the opportunity to take control of their retirement income. The Association of British Insurers says that in the first three months since pension reforms were introduced in April 015, .5bn was withdrawn from pension pots of which 1.3bn was taken in lump sums. etirement is a key advice point for many wealthy individuals and they have more options thanks to these freedoms. Mergers and acquisitions

have been a feature of the wealth management market recently. Looking through the names of wealth managers in this year’s survey, two merged examples jump out: Tilney Bestinvest and uilter Cheviot. Most of the protagonists cite the benefits of scale in coping with the additional administration, training and compliance costs, mainly predicated by D . It appears many clients have been retained in the new larger businesses. Nonetheless, clients of the wealth managers surveyed by Wealth- tend not to have seen their fees increase since last year. Two factors may have contributed to this. irst, more wealth managers are using a finite range of investment products, rather than an open architecture through which they can select from products from many asset managers . Second, many wealth managers have moved lower value discretionary clients into funds with model portfolios. While clients may not have noticed a considerable change in how their investments are managed or distributed between assets, this is a considerably cheaper structure for many providers. Despite all these changes, clients do not appear to have experienced a drop in service. In 01 , the average number of clients at each adviser was 1 5 now it is 1 0. On this basic measure, frontline services have been protected. And with better trained advisers now advising clients, increasingly they should be being placed in more appropriate products and investments. Wealth- has not noticed significant falls in satisfaction in client surveys for wealth managers. However, how wealth managers achieve brand affinity to new larger institutions and respond to the growing “threat” of technology will determine which are most successful in serving the wealthy in future years. David Barks is an associate director at Wealth-X Custom Research, the global provider of wealth intelligence and research partner of the FT Private Client Wealth Management survey for the past seven years

Survival o t e itte t: ut t ere i no ign o ig er ee a yet accor ing to ealt — tt

| FTMoney 10 | FTMoney

FINANCIAL TIMES SaturdayTIMES 18 JuneSaturday 2016 18 June 2016 FINANCIAL

PRIVATE CLIENT WEALTH MANAGEMENT PRIVATE CLIENT WEALTH MANAGEMENT

am & Co

1516 96

Adam & Co

11800 4 51

1200 11800

0 0Entire market ('Open 1200 0 EntireArchitecture') market ('Open Architecture')

3795 3 45

691 3795

40 9Entire 691 X X market40 ('Open EntireArchitecture') market ('Open Architecture')

28 447

10 ooks Macdonald AssetMacdonald Management Brooks Asset Management

Hoare & Co. C Hoare & Co.

7822 0 18300

1707 2 2120512

1707

9 12000 4850 3797 X ('Guided Architecture') 4 10932909 12000 3290Selected 4850universe 3797 Selected universe ('Guided Architecture')

ntab Asset Management Cantab Asset Management

350 2

zenove CapitalCazenove Management Capital Management

5153 6 84 7280

i Gold

Citi Gold

ose Brothers Asset CloseManagement Brothers Asset Management 8 155

utts

edit Suisse

rt Capital

Coutts

4 2

120003 38

9100 66000

17 292 500 1987 3 59

X X

X Selected ('Guided Architecture') 9100universe Selected universe ('Guided Architecture')

XX X

X X Selected universe ('Guided Architecture') Selected universe ('Guided Architecture')

Credit Suisse

1987

Dart Capital

364 1

3 230

324 364

023Selected ('Guided Architecture') 324universe 0 Selected universe ('Guided Architecture')

817 3

6 580

450 817

market ('Open 58Entire450 EntireArchitecture') market ('Open Architecture') X

410 1 10 1460

2039 410

X ('Guided Architecture') 146Selected 2039universe Selected universe ('Guided Architecture')

685 market ('Open 5155Entire1812 685 EntireArchitecture') market ('Open Architecture') X

12 22000 1289 9 75300912 22000

market ('Open 3009Entire1289 EntireArchitecture') market ('Open Architecture') X

1 12 ndon & CapitalLondon Asset Management & Capital Asset Management

1000 1 12

1400 1000

Inroy & WoodMcInroy & Wood

709 3 10

12 165

16 273 thbones Investment Management Rathbones Investment Management

Killik & Co

einwort Benson Kleinwort Benson

ilter Cheviot Quilter Cheviot

dmayne-Bentley Redmayne-Bentley

39452 12 16514842

15133 39452

17 Entire market 17 ('Open 1484 15133 EntireArchitecture') market ('Open Architecture') X

32777 2398618 16 273

1096 23986 1018 Entire market ('Open 32777 1096 1018 EntireArchitecture') market ('Open Architecture') X

1495 3 41 3554

6091 1495

market ('Open 355Entire 6091 EntireArchitecture') market ('Open Architecture') X

5567 3 35

5769 5567

0 0Entire5769 market ('Open 0 EntireArchitecture') market ('Open Architecture')

rasin & Partners Sarasin & Partners

2500

underson House Limited House Limited Saunderson

1900 1 5140010

ven Investment Management Seven Investment Management

17595 2 4877439

esis Asset Management Thesis Asset Management

ney BestinvestTilney Bestinvest

urce: Wealth-XSource: PrivateWealth-X Client Wealth Management Survey 2016 Private Client Wealth Management Survey 2016

Other

X X

XX XX

X X

X XX

X X

1913 235 10 42

1319 32 23

X X

517 42 34

Trust & Estate Planning

Tax Planning

Other Equity Private

Trust & EstatePlanning Planning Philanthropic

Tax Planning Pension and Retirement Planning

Privateservices Equity Online

Philanthropic Planning "Online Discretionary Investment Management

Pension and Retirement Planning

1316

Online services Mortgages

"Online Discretionary Investment Management Insurance

XX X

172 34 30

X XX

X X

326 7231 543 970779 169423 195293 33653 326 7231 543 970779 169423 195293 33653

Entire3776 market ('Open EntireArchitecture') market ('Open Architecture')

Entire market ('Open 9900 EntireArchitecture') market ('Open Architecture')

3776 2000

9900 3900

2000 1 21

3900 4 15

averton Investment Management Waverton Investment Management1

860 X ('Guided Architecture') 869Selected 715universe 860 Selected universe ('Guided Architecture')

715 7361

7361 7 94 8694

Entire market ('Open 6508 EntireArchitecture') market ('Open Architecture')

6508 11600

2200 market ('Open 5500 2500 2900Entire 2200 2500 EntireArchitecture') market ('Open Architecture') X

stra Wealth Vestra Wealth

5500 8 7729007

H Ireland

11600 6 43

1003 market ('Open 7000 2503 4348Entire 1003 2503 EntireArchitecture') market ('Open Architecture') X

8594 X X ('Guided Architecture') 7 2097839 20 10028 8594 16992 7839Selected 10028universe 16992 Selected universe ('Guided Architecture')

7000 3 60434810

25 Entire2322 market25 ('Open 7743 EntireArchitecture') market ('Open Architecture') X

2322 17595

62 70877 1410 2162 market ('Open 24 2125828 62 70877 5828Entire1410 2162 EntireArchitecture') market ('Open Architecture') X

24 212

X X

1900

In-house Fund Management

Mortgages Hedge Funds (including funds of funds)

17 16000 market ('Open 7 170129617 10770 16000 1677 1296Entire 10770 1677 EntireArchitecture') market ('Open Architecture') X

Totals

4001Entire market ('Open EntireArchitecture') market ('Open Architecture') X

7 209

tals

Selected ('Guided Architecture') 2500universe Selected universe ('Guided Architecture')

S Wealth Management (UK) UBS Wealth Management (UK)

W H Ireland

XX X

22 3113 278 263000 60800 1200 60800Selected X X ('Guided Architecture') 22 3113 278 263000 1200universe Selected universe ('Guided Architecture')

8 77 7 ciete GeneraleSociete PrivateGenerale Banking Private Hambros Banking Hambros

Insurance Investment Management Discretionary

andard Life Wealth Standard Life Wealth

Entire1139 market ('Open EntireArchitecture') market ('Open Architecture')

7 170

1139 709

mith & Williamson Smith & Williamson

8 168721 671 3200 market ('Open 37 93 9378 168721 937Entire 671 3200 EntireArchitecture') market ('Open Architecture') X

SJP

XX XX

Entire market ('Open 1400 EntireArchitecture') market ('Open Architecture')

thschild Wealth Management Rothschild Wealth Management

X X Entire market ('Open EntireArchitecture') market ('Open Architecture')

0 15000 1812 5 8851550 15000

lik & Co

JM Finn

X XX

Finn

X XX

018Entire 187 market ('Open 0 EntireArchitecture') market ('Open Architecture') X

4 180

187 452

452 1

X X

estment Quorum Investment Quorum

X XX

9 60000 21657 15 38858859 60000

X X

estec Wealth Investec and Investment Wealth and Investment 15 388

X XX

market ('Open 5885Entire 21657 EntireArchitecture') market ('Open Architecture') X

GAM

1130 2000 X X ('Guided Architecture') 500Selected 1130universe 2000 Selected universe ('Guided Architecture')

In-house Fund Management Concierge

market ('Open 12000Entire 8250 EntireArchitecture') market ('Open Architecture') X

Hedge Funds (including funds of funds) Commodities

Discretionary Investment Management Charity Services

Concierge Brokerage

21147 market ('Open 5153 3992 728Entire 21147 3992 EntireArchitecture') market ('Open Architecture')

8250

Commodities Banking

X XX

091Entire298 market ('Open 0 EntireArchitecture') market ('Open Architecture') X

1474Selected universe X X ('Guided Architecture') 14 Selected universe ('Guided Architecture')

29 74

66000 8 155

17 292

298 350

uilibrium Asset Management Equilibrium Asset Management

8 910

Entire7822 market ('Open EntireArchitecture') market ('Open Architecture') 450 ('Open 2051Entire market 450 EntireArchitecture') market ('Open Architecture')

4 109 naccord Genuity Wealth Management Canaccord Genuity Wealth Management

i Private BankCiti Private Bank

10 70000 ('Guided Architecture') 28 447350010 25900 70000 3800 3500Selected 25900universe 3800 Selected universe ('Guided Architecture') 0 18300 10

26 510 30 15500 10000 2000 6000 X X rclays Wealth Barclays and Investment Management ('Guided Architecture') 26 510 30 15500 10000Selected 2000universe 6000 Selected Wealth and Investment Management universe ('Guided Architecture')

ewin Dolphin Brewin Dolphin

Charity Services Advisory Investment Management

Brokerage Access to Alternative Finance / Crowdfunding

Banking

Advisory Investment Management

Access to Alternative Finance / Crowdfunding

Investment products/services used

Value of Execution only AuM (£m)

0 Not answered 500 1516 0 Not answered

ACPI

buthnot Latham Arbuthnot Latham

96 1 11 5003

Investment products/services used Value of Discretionary AuM (£m)

Number advisersAuM (£m) Value of of Advisory Advisers joining in 2015 Value of Discretionary Active individual clientsAuM (£m)

Active individual clients

Advisers joining in 2015

Number of advisers

Value of of Advisory ExecutionAuM only(£m) AuM (£m) Value

Services

Wealth manager

ervices

X X

17 23 20 27 27 22

617

1 2313 27 10 32 221

5% 70% 37% 40% 2% 53% 5% 79% 70% 30% 37% 12% 40% 98% 79% 44% 30% 53% 12% 23% 98% 30% 44% 74% 53% 23% 30% 63% 74% 51% 2% 40% 53% 47% 63% 63% 51% 14% 40% 47% 63% 14%

FTMoney | 11

FINANCIAL TIMES Saturday 18 June 2016

PRIVATE CLIENT WEALTH MANAGEMENT

From parties in Barcelona to wedding elephants CONCIERGES

How wealth managers woo clients by offering additional services ATTRACTA MOONEY

When Ed Clare, a property developer, organised a friend’s stag party in Barcelona this year, he knew exactly who to turn to help him plan the fourday trip: his wealth manager. He picked up his phone and called a concierge service provided by Coutts, the private bank and wealth manager. After an “informal chat”, the concierge sent over an itinerary packed with suggestions for the best bars, clubs and restaurants. As a result, the stag do was “really great”, the 30year-old says. It was one of the simpler requests that Coutts concierge service, run by Ten Group, has had. In the past, its clients have asked it to arrange a wedding ceremony on Juliet’s balcony in Verona, source an elephant

for a wedding reception and arrange for a client’s daughter to play the organ in NotreDame Cathedral in Paris. Steven Light, director of digital at Coutts, says: “[The concierge] is sourcing things for people that they can’t get themselves or don’t have the time to get.” Coutts is “focusing a lot of attention” on providing clients with additional services outside finance, he adds. “You need to get the basics right — the banking and wealth management. You need to do these well. But the extra services add to the experience [we offer]. And this is hugely important to us,” says Mr Light. Coutts is not exceptional in expanding beyond its traditional remit. Across the board, wealth managers and private banks offer a wide array of non-financial services as they attempt to engender client loyalty. These extras range from

philanthropy services to events aimed at young people, such as a “next-generation” summit offered by Julius Baer, the Swiss wealth manager, where Google employees have spoken. HSBC Wealth Management also offers seminars for the children of some its clients, as does SGPB Hambros, the UK private bank and wealth man-

ager. At its finance academy, its clients’ children can spend two days learning about wealth planning and investment management. Jason Butler, a personal finance expert, says these extra services often prove popular with clients because they remove hassle from their lives. “The most progressive

Stag party venue: Park Guell in Barcelona — iStock

[wealth managers] know that they deliver value by making sure that they help clients to be clear what they want from life, work out how best to achieve that and then make sure it happens with minimum hassle, cost and complexity,” he adds. Mr Butler says wealth managers such as KMD Private Wealth Management, the UK company, will help clients to find suppliers, ranging from housesitters to yacht brokers, or will look after a household by paying bills and renewing insurance. UBS Wealth Management is another company that is focusing on the little extras it can offer clients. Tom Hall, head of philanthropy services at the Swiss wealth manager, says the company has “put a significant amount of resources into developing new services outside traditional wealth management” over the past two years, including a range of philanthropic

services to help clients in their charitable endeavours. Other wealth managers try to build loyalty by offering events. Indosuez Wealth Management organises around 150 different events for clients each year, including a Wealth & Beyond Summit, where speakers have included former ministers and technology experts. Holly Mackay, founder and chief executive of Boring Money, a finance website, says services such as a concierge can help a wealth manager or private bank stand out from the high street competition. But some are less convinced by their benefits. Lee Goggin, co-founder of findawealthmanager.com, an online platform, says: “I believe fewer clients are expecting or indeed want these services to be offered. “We are in a low-return environment so clients are focused on investments and safety rather than jolly ups.”

12 | FTMoney

FINANCIAL TIMES Saturday 18 June 2016

Hugo Greenhalgh Investing Focus on costs when returns are low

now your customer may have become the new maxim for the UK’s 1. tn wealth manager industry, but actually remembering them might be a good start. The industry is currently in the throes of merger mania, as companies seek to plug gaps in their offerings, take on more clients and reach that sweet spot of funds under management when they can finally turn a profit. Change might be good for the firms, but where does it leave you, the client Many customers, particularly older ones, will have become used to their trusted adviser someone they have turned to many times over the years who knows and understands their affairs as well as they do. What happens when the family’s wealth manager gets snapped up by a larger, often non-UK, company The oak-panelled office might be replaced by an anonymous glass box in a corporate skyscraper, but a bigger worry is whether the manager you have built up a special relationship with over the years will move on to another firm altogether. Mergers might be better for a company’s bottom line, but they might not necessarily be for yours. Merger and acquisition activity, particularly among midsized wealth managers with 5bn- 10bn under management, has been high for a number of years. In 013, Swedish

bank Handelsbanken snapped up wealth manager Heartwood. The same year, Permira, a private equity group, swooped on Bestinvest, a UK private client group, before scooping up former stock broker Tilney a few months later. In one week alone in March this year, two further firms fell into the clutches of larger companies. Liechtenstein’s LGT Group took a majority stake in London-based boutique, Vestra Wealth, and Soci t G n rale moved to buy City stalwart Kleinwort Benson. Scorpio Partnership, the wealth management consultancy, recently reported that the number of wealth management deals for 015 had surged to 1 — up from 3 the year before. But what have been the effects of this merger mania So far, wealth managers say the wave of consolidation has not put up prices for clients — a fact borne out by the data in this year’s survey by Wealth- . At a time when investment returns are dwindling, fee rises will be distinctly unpalatable for clients, so newly enlarged firms will be seeking to make savings through economies of scale. “Customers should expect charges to trend downward,” says obin Savage, research director at eus Capital, the corporate finance boutique. “The market is fragmented and will continue to be fragmented even after consolidation.” or John Barrass, deputy chief executive of the Wealth Management Association, further M&A activity is likely to benefit the wealthy. “There will still be enough competition to keep a lid on fees, and wealth managers that are acquired will deepen their range of funds and services,” he predicts. “Consolidation is about gaining economies of scale and driving costs down rather

than up.” But what happens when your trusted adviser moves to another company in the wake of the merger Can you follow them without incurring the usual initial fees In a word, no. Many companies will have written into their employees’ contracts what is known as a “no approach clause”, precisely to prevent them from taking their clients with them. air enough, you might think, but little help if your favoured smaller, boutique wealth manager is now part of a global conglomerate. The problem for the wealth managers is one of capacity. If your adviser has funds of between 5bn and 15bn, it is hard for them to

The current merger mania might play in your favour. Competition to gain your funds has never been hotter make money. Not your problem, of course, but an issue for the industry that will only deepen over the next few years. So what should you do Move Well, if you do, be careful of what Charles Calkin, head of financial planning at James Hambro & Co, calls “lobster pot investments”. These are where you’re lured into an investment management service not fully understanding the costs and consequences of signing up, and which may, he explains, subsequently be difficult to exit. “A surprising number of firms can trap you. You may find some rewarding the sales rep who smooth-talked you in with 3 per cent of your initial investment and requiring you to stay for six years. “Some wealth managers can

imprison you with invisible chains, by putting your assets in their own funds that can only be held by clients of that firm,” he adds. Mr Calkin’s point is a simple one, but worth stressing: when you choose a manager it is perfectly reasonable to expect no value-based initial fees and no exit fees. In a low-return environment the focus on costs should be greater than ever. “I suspect the spotlight will be increasingly shone on these practices, which can only be a good thing for the investor,” he argues. But wealthier parent companies also come with deeper pockets. Just because the ultimate owner of your adviser might be thousands of miles away it doesn’t mean that service has to suffer — you could find it is quite the opposite. obo-advice — the provision of automated online advice — which is being watched carefully by managers large and small, would be far too expensive for many of the more niche wealth advisers to be able to afford. With a larger parent, you might just find your suite of services has extended far beyond what you were previously offered. Ultimately, the current merger mania might play in your favour. The UK’s financial services industry is fragmented enough to cope with further consolidation — and competition to gain your funds has never been hotter. So the message is simple — don’t be afraid to make demands on your existing wealth manager — or go and find a new one. ugo reenhalgh is the FT s Wealth Correspondent, and editor of FT Wealth Maga ine To read a free selection of articles online, visit FT com wealth The ne t edition of FT Wealth will be published on une and distributed within the FT newspaper