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FINANCIALTIMES|SaturdayJune20 /SundayJune212015 Private Client Wealth Management

An FTMoney Guide

The robo advisers are coming How to find your wealth manager No way back for bonds? But what effect will they have on the £1.1tn UK An adviser should offer more than just Yields are so low that many industry watchers wealth management market? investments, experts say believe the only way is up PAGE 4 PAGE 7 PAGE 11 2 | FTMoney FINANCIAL TIMES Saturday 20 June 2015 FINANCIAL TIMES Saturday 20 June 2015 FTMoney | 3 PRIVATECLIENTWEALTHMANAGEMENT PRIVATECLIENTWEALTHMANAGEMENT

and Ruffer are all among the large chunks of short-term Investec is limiting maturity both property and infrastruc- first such trust to come to the opportunities for alpha gener- firms with zero holdings of northern European govern- and credit risk, and holding ture in recent years, “yield market, although Mick Gilli- ation. The elusive search for alpha continues corporate bonds in their bal- ment debt traded at unprece- many bonds to maturity, compression in prime gan, head of fund research, “We are coming up to some anced portfolios, as the asset dented negative yields, avoiding the effects of any sell- property investments is a cautions: “It is very early days sort of crunch point, though class is challenged by low although that trend has since off. cause for concern, as are the in this area, and it will take we don’t know what form that OVERVIEW resulted from years of quanti- “This is a situation where horizon to indicate that the yields, liquidity worries and goneintoreverse. So-called “alternative” asset premiums to net asset value at time and probably a recession willtake,”hesays. Wealth managers tative easing, in which the activemanagersandmanagers equity bull market is over, volatility. One firm taking a different classes have benefited from whichthesharepricesofinfra- toprovideaproperstresstest.” “In the future, we’re not world’scentralbankshavecol- who take a specific approach although we may have a sum- James Maltin, chief invest- approach is Investec Wealth, the hunt for yield. Allocations structure funds trade”, Mr In the meantime, many going to get a situation where move higher up lectively injected billions into toinvestmentshouldshine.” merdipaswehaveinthepast,” ment officer at Rathbones, which holds 28.5 per cent in to hedge funds are up slightly Maltinsays. wealthmanagersbelieveanew equities are less volatile than the risk curve markets across the globe. The Until that shift occurs, port- says Canaccord’s chief invest- says: “We have reduced our government bonds thanks to a on last year, as are private Income seekers have also investment environment is bonds for any period, and FTSE All World, for example, folio construction presents mentofficer,NigelCuming. position in conventional “bar-belling” approach which equityholdings. looked to newer asset classes, approaching, potentially to we’re not going to get a situa- JUDITHEVANS has been on a rising trajectory particular challenges, espe- PSigma, by contrast, rejects bonds with a preference for aims to exploit negative corre- Rathbones has increased its suchaspeer-to-peerdebt,now be sparked by the long- tion where skilful managers The past three years have not since late 2011, gaining almost ciallyatthecautiousend.“The the increased equity alloca- short-dated index-linked gov- lations between bonds and positions in asset classes accessible through a series of awaited rise in US interest selecting the best companies been straightforward for 60 per cent. The volatility of only real cautious portfolio tions adopted by some rivals, ernment bonds . . . Coupled equities. beyond equities and bonds. investment trusts. Killik has rates.MrHarrisonisconfident to invest in are not adding investing. Less than 20 per equities has fallen, while that these days is cash — or a port- instead seeking yield through with an improving labour This served the company But having been exposed to invested in P2P Global, the that this will present new anyvalue.” cent of wealth managers’ of bonds has risen, even as foliothatisveryhighlydiversi- quality fixed income and spe- market and increasing pres- especially well in 2008, 2011 portfolios have added positive bond yields became tightly fied,”arguesMrBecket. cialist credit, while protecting sure on wages, we consider and more recently last year, alpha, according to figures compressed. Among balanced portfolios, against inflation through inflation-linkedbondstobean when UK bond markets far from Asset Risk Consultants, “Mixed asset portfolios are Canaccord Genuity Wealth index-linked bonds and com- attractive alternative to cash, outperformed equities, says against 50 per cent that gener- converging in terms of risk, Management has the largest modityholdings. especially for higher-rate tax- Darren Ruane, head of fixed ated negative alpha in the and differentiation of invest- allocation to UK and interna- Across the board, corporate payers.” interestatInvestec. threeyearstotheendof2014. ment styles from a pure vola- Growth — a chance for fund managers to shine — iStock tional shares, according to this bond allocations have fallen: Meanwhile, some 30 per “However, we may begin to This was not down to any tility point of view is becoming year’s Financial Times wealth among wealth managers sur- cent of wealth managers sur- see some of these asset classes risk aversion: portfolios have extremely hard,”says Graham End investors have made future. We think markets management survey, with veyed, the mean allocation in veyed have no allocation to become positively correlated, been steadily squeezed up the Harrison, group managing returns, but they could also are going to become much 69 per cent in the asset class. balanced portfolios has fallen government bonds at all in particularly as interest rates risk spectrum, according to directoratARC. have made those in simple more investment specific, Thiscompareswithanaverage to 17 per cent from 19 per cent their balanced portfolios. This starttorise,”headds.Inprepa- ARC, with cautious portfolios “Skill hasn’t really been portfolios of tracker funds. Is regional and sector specific,” of 49 per cent and a low of a year ago. In growth portfo- is hardly surprising in a world ration for this, the company containing high equity alloca- to the fore since the financial that set to change? “I’m says Tom Becket, chief invest- 20 per cent, held by GHC Capi- lios, it is down slightly from 11 of such low yields that credi- has begun switching some tions. crisis took place and the very much a believer that the ment officer at PSigma Invest- talMarkets. percentto10percent. tors will even pay govern- assets from equities into cash. The unusual climate has liquiditytapswereturnedon.” past is not a prologue to the mentManagement. “There’s nothing on the Charles Stanley, Rothschild ments to borrow; in April, In its corporate bond holdings,

Performance Average balanced portfolios Per cent Average % performance of balanced portfolios invested on behalf Average % performance of capital growth portfolios invested on behalf Commodities of UK private clients (cumulative, not annualised) to end 2014 of UK private clients (cumulative, not annualised) to end 2014 Property Wealth manager Over 1 year Over 3 years (cum) Over 5 years (cum) ARC verified Over 1 year Over 3 years (cum) Over 5 years (cum) ARC verified Private equity Other Adam & Company 4.6 28.4 47.1 X 4.4 33.6 54.3 X Arbuthnot Latham 7.2 32.1 42 7.2 38.5 N/A Hedge funds Barclays Wealth and Investment Management 3.5 21.4 N/A X 4.4 28.2 N/A X Cash Brewin Dolphin 7.16 30.67 N/A 6.25 37.03 N/A Equities Brooks Macdonald Asset Management 5.12 26.77 36.9 X 4.87 29.51 39.33 X Government bonds Canaccord Genuity Wealth Management 5.48 33.52 47.52 6.85 39.6 54.73 Cazenove Capital Management 3.1 25 36.3 X 3.5 30.5 43 X Charles Stanley Group PLC 3.37 26.37 32.39 3.93 35.44 41.47 Corporate bonds Citi Private Bank 3.11 27.46 42.4 3.79 42.2 55.01

Close Brothers Asset Management 4.41 22.16 35.79 3.81 25.79 38.13 Sources: FT; WealthX Duncan Lawrie Private Bank 4.69 27.43 38.65 X 4.02 28.68 39.58 X Equilibrium Asset Management LLP 5.51 33.15 40.55 X 5.12 34.95 41 X GAM 3.33 30.33 34.56 X 2.72 38.98 44.46 X Post-election position of greater strength GHC Capital Markets Ltd 6.98 21.6 25.64 5.16 24.71 32.65 in terms of his electoral Heartwood 2.8 26.6 35.6 X 2.8 36.7 44.2 X EU referendum and success and the performance Ingenious Asset Management 5.7 20.7 33.1 X 6.8 25 38.4 X austerity loom large of the UK economy. “We’d Investec Wealth and Investment 4.6 28.2 39.9 X 4 32.6 45 X expect the UK to remain and Investment Quorum Ltd 4.51 25.54 35.53 5.52 35.19 43.61 Having emerged from the would prefer a referendum James Hambro & Partners 6.06 30.26 N/A X 6.04 33.75 N/A X political cauldron of the sooner than later.” JM Finn 3.6 30.9 47.8 X 2.9 29.9 44.2 X general election, UK investors Some wealth managers London & Capital 6.7 27 N/A 7.1 44.3 N/A welcomed the shift from the flagged concerns around the McInroy & Wood Ltd N/A N/A N/A 7.3 33.1 57.3 coalition to a slim majority for Conservatives’ commitment PSigma Investment Management 2.87 25.05 30.63 X 3.33 30.94 38.33 X the Conservatives. Proposals to fiscal austerity, after Quilter Cheviot 4.75 27.98 42.24 5.66 37.11 49.51 by Labour and the Liberal George Osborne, the Rathbones Investment Management 5.68 29.15 41.56 X 4.06 32.14 46.58 X Democrats to hit the wealthy chancellor, pledged to RBC Wealth Management 3.31 24.23 35.62 X 3.64 29.9 42 X with mansion taxes, rent eliminate the deficit by 2018. Redmayne-Bentley -2.52 27.99 45.13 X N/A X controls and the abolition of Balancing the books is a Rothschild Wealth Management 7.52 30.05 40.94 X 8.13 35.45 47.07 X the non-dom regime were laudable aim, but only if Ruff er LLP 4.2 21 41.1 X N/A N/A N/A X rejected at the ballot box, to doing so does not drag down Sarasin & Partners 7.45 30.51 37.52 X 7.15 33.56 40.93 X the relief of wealth managers GDP growth by cutting Saunderson House Limited 5.5 32.7 43 X 5.7 36.7 47.8 X and investors. investment and consumer But while some threats spending. Frederique Carrier, Seven Investment Management 5.96 29.74 35.94 X 6.44 37.56 42.94 X receded, others loomed into director of European equities St. James’s Place 6.54 28.93 N/A 6.19 44.94 N/A view, notably the EU at RBC Wealth Management, Smith & Williamson 6.03 24.72 41.58 X 5.06 32.21 48.89 X referendum and a potential said Mr Osborne could ease Stanhope Capital 3.3 19.7 30.6 4.2 24.2 34.4 raid on pensions relief. the pain in the Budget. “We Thesis Asset Management 5.55 28.88 40.63 X 5.82 33.34 43.84 X Chris Kenny, partner at think he’ll announce plans to Tilney Bestinvest 5.8 31.9 39.8 X 5.1 37.4 48.1 X Smith & Williamson, said smooth this transition.” Waverton Investment Management Limited 5.02 24.88 34.62 X 6 30.73 43.34 X investors needed to focus on However, Mr Kenny argued the referendum as a source of the Conservatives were likely Average 4.82 27.38 38.52 5.14 33.73 42.91 volatility, even though prime to press ahead while they had Max 7.5 33.5 47.8 8.1 44.9 57.3 minister David Cameron was the momentum of victory. Min -2.52 19.70 25.64 2.72 24.20 32.65 now operating from a James Pickford Notes: ACPI Investments, Killik & Co, Lombard Odier and UBS Wealth Management did not disclose figures 4 | FTMoney FINANCIAL TIMES Saturday 20 June 2015 FINANCIAL TIMES Saturday 20 June 2015 FTMoney | 5 PRIVATECLIENTWEALTHMANAGEMENT PRIVATECLIENTWEALTHMANAGEMENT

Investment allocation Slow march of the robo advisers Current asset allocation of average balanced portfolio invested on behalf of UK private clients (%) Current asset allocation of average capital growth portfolio invested on behalf of UK private clients (%) Bonds: Bonds: Private Hedge Bonds: Bonds: Private Hedge Wealth manager Cash Equities corporate government Property equity funds Commodities Other Cash Equities corporate government Property equity funds Commodities Other ACPI Investments 7 35 45 0 0 0 13 0 2.3 40.2 47.4 0 0 0 10.1 0 TECHNOLOGY ing Investec Wealth, Brewin investment supermarket roboadvice,”saysMrPolson. Adam & Company 2 53 18 24 3 0 0 0 2 78 5 12 3 0 0 0 Dolphin and BarclaysStock- approach; you’ve got Nutmeg “Also, going down the robo Arbuthnot Latham 0 55 20 5 5 0 15 0 0 0 67.5 12.5 0 5 0 15 0 0 Well-known brands Barclays Wealth and Investment Management 13 54 5 4 4 0 13 2 5 5 73 1 0 6 0 8 3 4 brokers — plan to launch simi- with a direct discretionary routeisnotalwaysparticularly Brewin Dolphin 3 56 16 12 4.5 0 0 0 8.5 3.5 72.5 9 5.5 4 0 0 0 5.5 plan to launch Brooks Macdonald Asset Management 5 42 22 0 10 0 9 0 12 3 62 13 0 6 0 6 0 10 lar robo services this year, offering; you’ve got Money on cheap for the investor. The Canaccord Genuity Wealth Management 2.2 68.6 9.7 10.7 0000 8.81.6760 8.3 0000 14.1 automated services while Hargreaves Lansdown, Toast and Wealth Horizon total cost of ownership is often Cazenove Capital Management 7 43 13.1 9.5 5.9 0 12.6 1.8 7.1 3.4 61.9 6.9 5.6 5.8 0 9.6 1.8 5 Charles Stanley Group PLC 10 45 0 0 20 0 25 0 5 68 0 0 15 0 12 0 the biggest direct-to-con- offering advice or simplified welloveronepercent.” Citi Private Bank 0 40 30 30 0000 07220 0 8000 JUDITHEVANS sumer fund shop, this month advice. There is also the Then there is the question of Close Brothers Asset Management 9 60 15 1 2 0 3 1 9 8 78 4 0 1 0 3 1 5 Duncan Lawrie Private Bank 4.5 53 17 9.5 5 0 0 0 11 4 68 6 12 3 0 0 0 7 launched its own Portfolio+ growth of investment ‘solu- reputation, in which estab- Equilibrium Asset Management LLP 8 35 10 0 28 0 0 0 19 8 65 0 0 13 0 0 0 14 The robots are marching service. tion’ type products,” said Mr lished companies may have an GAM 5.15 52.74 21.41 0 0 0 13.26 0 7.44 2.01 73.55 21.57 0 0 0 2.87 0 GHC Capital Markets Ltd 0 20 30 30 20 0 0 0 0 45 25 0 30 0 0 0 towards the wealth manage- “It’s going to be a slow burn, Fawcett. “There are quite a lot advantage. Heartwood 5.6 51.5 11.2 10.2 8.1 1.4 8 4 2.3 78.3 5.8 0 8.1 1.2 1.3 3 ment industry, but perhaps and I don’t think the big of different ways you can A report by Numis Securi- Ingenious Asset Management 1 51.2 7.8 0 9.9 0 0 0 30.1 1 72.1 4.8 0 4.9 0 0 0 17.2 more slowly than originally brands are going to allow the addressthisneed.” ties in May said robo-advisers Investec Wealth and Investment 7 40 7 28.5 7.5 2 8 0 3 67 5 11.5 5.5 2 6 0 Investment Quorum Ltd 13 28 40 10 5 0 4 0 2 72 16 5 5 0 0 0 billed. little guys to run away with it. MarkPolson,founderofThe were unlikely to substantially James Hambro & Partners 5 57.5 10 10 5 0 0 0 12.5 5 72.5 2.5 7.5 5 0 0 0 7.5 Online “discretionary But a lot of people in the mar- Lang Cat, a consultancy, affect the £1.1tn UK wealth JM Finn 8.2 74.5 2.5 7.7 0.9 0 0 0.3 5.9 9.5 76 1.6 4.8 0.6 0 0 0.4 7.1 Killik & Co 3 72 15 0 5 0 5 0 2.5 85 0 0 0 2.5 7 3 direct” investment services, ket are now taking this more argues that online portfolio management market in the London & Capital 10 50 40 0 0000 107020 0 0000 McInroy & Wood Ltd N/A N/A N/A N/A N/A N/A N/A N/A N/A 1 70 0 29 0000 also known as “robo advisers”, seriously,” says Jeremy Big names plan to roll out ‘robo’ services — Shutterstock services may not have fully next five years. But Numis PSigma Investment Management 5 43.75 22.5 11.5 0005 12.2535421 4.5 0006 11.5 began launching in 2012, Fawcett, head of direct at Plat- established what need they pointed out that Hargreaves Quilter Cheviot 4.5 31 20.7 25.3 6 0 10.5 2 2 78.5 3.2 2.8 5 0 6.5 2 promising to disrupt tradi- forum,aconsultancy. seektoaddress. Lansdown, once an upstart Rathbones Investment Management 9 35 13 21 3 0 0 3 16 4 63 8 10 2 0 0 1 12 RBC Wealth Management 2.2 39.6 26.7 3.5 3.2 0 12.4 2.4 10 2 49 15.3 3 4.1 0 14 5.1 7.5 tional models through Traditional models main- different risk appetites, com- most operators in this People with under £30,000 challenger, has risen over Redmayne-Bentley 4 82 10 0 0000 4 technology. tained a distinction between binedwithsimplifiedadviceor spacedislikethe“robo”label. to invest may struggle to pay three decades to command Rothschild Wealth Management 3.3 59 0 14.7 0 0 22.5 0 0.5 6.3 68.5 0 0 0 0 24.7 0 0.5 Ruff er LLP 14400 28 0005 13 Threeyearslater,thebiggest advice, delivered by a human “guidance”. In the US, online services for advice under regulations significant market share in its Sarasin & Partners 5 45 16 22 2 3 7 0 8 63 8 12 2 3 4 0 companies such as Nutmeg being, or discretionary man- By doing this, they can like Betterment and Wealth- introduced in 2013 banning sector. Saunderson House Limited 6 55 17 8 14 0 0 0 3 66 11 6 14 0 0 0 Seven Investment Management 10.9 50 28.9 3.8 1.9 3.5 0.1 0 0.9 11.6 65.6 14.2 0 2.9 5.7 0 0 and Money on Toast will still agement, in which the human sometimes cut costs. Money Front have converged around payment through commis- Nick Hungerford, chief St. James’s Place 7.5 50 28.3 0 8.3 0 0 0 5.9 9.8 72.5 11.7 0 0000 6 not reveal what level of assets manages investments on cus- on Toast, for example, boasts a similar model: algorithm- sions, yet there has not so far executive of Nutmeg, argues Smith & Williamson 6 63 12 5 5 0 4 0 5 4 76 5 4 4 0 4 0 3 Stanhope Capital 13 48 14 0 0 0 15 3 7 3 62 9 0 0 8 12 2 4 they manage, but do not tomers’ behalf, and direct-to- of cutting out layers of per- driven, low-cost, with passive been a mass movement of that as soon as one of the “old- Thesis Asset Management 5.5 32.97 30 0 12 2.03 11.5 0 6 7.46 60.54 14 0 5 3.25 6.75 0 3 appear to have dented the consumer product sales, centage charges associated portfolios of exchange traded these people to “robo” serv- world brands” launches a dig- Tilney Bestinvest 5 50 9 9 9 0 12 0 6 4 73 3 2 6 0 10 0 2 UBS Wealth Management 5.78 52.22 18.3 23.7 0000 5.1971.4710.1713.17 0000 businessmodelsofestablished where customers make their with advice, investment plat- funds. But in the UK, the pic- ices. ital offering, the rest will fol- Waverton Investment Management Limited 6.2 48 16.8 5.2 5.2 0 8.3 2.1 8.2 3.5 67 10.8 3.2 3.5 0 5.5 1.4 5.1 wealth managers and fund owndecisions. forms and discretionary man- tureismorecomplicated. “Thefactthatsomeonecan’t low. Average (mean) 6.04 49.04 17.22 9.57 5.46 0.30 5.80 0.79 5.78 4.13 68.04 9.52 4.15 4.55 0.66 4.32 0.76 3.87 supermarkets. But these newer services agement. “You’ve got Hargreaves afford an independent finan- “They couldn’t risk missing Max 14 82 45 30 28 4 25 5 30 12 85 47 29 30 8 25 6 17 On the other hand, a host of tread a middle path, generally A slick but simple online Lansdown, which has been cialadviserdoesn’tnecessarily out. This will be fantastic for Min 0200 0 0000 0000 0 0000 0 well-known brands — includ- by offering portfolios aimed at interface is also key, although very successful with the mean that what they want is customers,”hesays. Notes: Lombard Odier did not disclose asset allocations Nice idea, shame about the sales

ATTRACTAMOONEY good return and did not harm withmajorgapswhentryingto people’sfuture. buildadiversifiedportfolio.” The opinion polls point in one The young and very wealthy Wealth managers such as direction — investors increas- are particularly taken with the Coutts, UBS and Rathbone ingly say they want sustaina- concept, says Leslie Gent, Greenbank Investments try to ble investments. But wealth managing director at Coutts. circumvent this by focusing managers report that actual “Thenextgenerationofclients heavily on individual stock growth is slow, raising ques- are a lot more interested in picking, screening out so- tions about how much [environmental, social and called sin stocks and finding demand there is for sustaina- governance]investing.” companies with good environ- bleproducts. But dig a little deeper and mental, social and governance Headline figures for sustain- the numbers for sustainable credentials. able investing, which take into investing look less impressive. Despite slow uptake cur- consideration both financial Assets managed in ethical rently, wealth managers returns and social impact, funds as a percentage of the expectsustainableinvestingto seem strong. UK ethical funds overall UK funds industry has grow in popularity. Products had their strongest sales since remained fairly stable since they rate include the Kames 2007 last year, with £460m thefinancialcrisisatjustover1 Ethical Equity, Standard Life flowing into the products, per cent, IA figures show. Ethi- UK Ethical, Alliance Trust UK more than double 2013’s cal funds currently make up Ethical and the Alliance Trust inflows, according to the just 2.07 per cent of the total Sustainable Future Global Investment Association. The number of mutual funds regis- Growthfunds. number of ethical funds regis- tered for sale in the UK, down Ethical bond products from tered for sale in the UK, mean- from about 2.35 per cent in Kames and Standard Life are while, has also soared, jump- 2009,accordingtoLipper. recommendedbywealthman- ing by almost 60 per cent since Jason Hollands of Tilney agers, as is the Royal London 2009,Lipperfiguresshow. Bestinvest says: “[Social Ethical Bond. On the passive Bill O’Neill, head of the UK responsibleinvestment]funds side,theygivethenodtoF&C’s investment office at UBS open to retail investors are Responsible Global Equity and Wealth Management, says: largely clustered in UK equi- Vanguard’s SRI Global Stock “We are increasingly getting ties, global equities and invest- GBP exchange traded fund, or questions about [sustainable ment grade corporate bond UBSethicalindexfunds. investing] and how we could space. Investors are presented However, while the number incorporate it into clients’ of ethical funds available is on investmentstrategies.” ‘Investors are presented the rise, it appears investors A recent poll by crowdfund- with major gaps when are reluctant to embrace the ing platform Abundance Gen- trying to build a conceptuntilthereismoreevi- erationfoundthatsevenoutof diversified portfolio’ dence of strong returns and a 10 Britons said they wanted to broader range of products invest in things that gave a available. 6 | FTMoney FINANCIAL TIMES Saturday 20 June 2015 FINANCIAL TIMES Saturday 20 June 2015 FTMoney | 7 PRIVATECLIENTWEALTHMANAGEMENT PRIVATECLIENTWEALTHMANAGEMENT

Clients, assets and fees Annual fee tariff (%) How to find the perfect money manager

GUIDANCE tory of the individual who will actually fighting for the privi- acomprehensiveservice,”says structuredasmandatesrunby “For instance, the inherit- Your adviser needs behandlingyouraffairs—how lege of managing people’s MrButler. third-partymanagers. ance tax benefits of holding long they have worked there, money.” Notallfirmsarelazywhenit Wealth managers must be assets within a pension are to have all-round whattheydidbefore,andwhat Ms Mackay opted to see a comes to investment strategy; flexible, adapting strategies to nowsoconsiderablethatmany industry knowledge happensiftheydoleave. financial planner who advises Ms Mackay cites St James’s fit customers’ goals for differ- investors are seeing their pen- Wealth manager Wealth funds invested % of discretionary in in-house funds adviso- size for Minimum portfolio ry management (£k) discre- size for Minimum portfolio tionary management (£k) £100,000 £250,000 £500,000 £1m £3m £5m (£) Minimum fee classes? Clean share commissions? trail Rebate disclosed) Dealing costs (where or custody ‘platform’ Separate charge? structures? fee Any alternative Notes ACPI Investments 5000 0.5-1.0 You can also ask how much her on tax and insurance, Place, which manages more ent segments of their money sion assets more as ‘family JUDITHEVANS experience they have of deal- while she handles her own than £55bn, as one company and the type of tax-efficient assets’and their investment Adam & Company 1 500 1.25 1.13 0.88 0.73 2000 Y N Passed through at cost N N Fee tariff includes custody, administration and reporting Since ancient Roman senators ing with clients similar to you, investments,shesays. that makes an effort to seek wrappers they are using, says horizon consequently extends

Arbuthnot Latham 0 50 400 1.25 1.25 1.25 1.25 0.96 0.88 5000 N/A Y Nil except for execution only N Y No transaction commissions on discretionary trail hiredfinancialadviserstolend what advanced-level profes- “If you focus on the right out the best fund managers to Andy Steel, chief executive of beyond the duration of their rebated since 2005 out their money, people with sional qualifications they have outcomes, you might not need manage its funds, which are JamesHambro&Partners. life,”hesays. Barclays Wealth and Investment 3 250 1.25 1.25 1.25 1.08 0.5-0.95 Y N/A Nil N N wealth have needed someone passed, and how they access Management else to manage it. These days, specialist expertise — from Brewin Dolphin 0 5000 150 0.75 0.75 0.75 0.6 0.38 On request £250 per quarter Y N/A £20 per trade N Y Commission: 1.25% on 1st 15,000; 1.00% on next 15,000; the Forum has been replaced outside firms if necessary — in 0.5% thereafter bytheinternet,butfindingthe areassuchastax. Brooks Macdonald Asset Man- 3 200 200 N/A N 1% on the first £10,000 (minimum £15 per trade); N/A N/A Fees available on application, starting at 0.75%+VAT. right intermediary is not a While assessing what Mr agement 0.15% from £10,001-£250,000; 0.11% thereafter Dealing charges may apply simplematter. Goggin calls your “chemistry” Canaccord Genuity Wealth Man- 0.1 0 50 1.5 1.5 1.5 1.5 1 By negotiation 1500 N/A N/A £30 per transaction N Y Full rate card available. Charges may diff er for off shore agement clients Behind superficially similar withthepotentialwealthman- offerings — wood-panelled ager, it is also vital to look at Cazenove Capital Management 8 1000 1000 0.75 0.75 0.50 - 0.75 Transaction charge: £50 per trans- Y N Bonds: 0.75% on first £30,000, 0.25% thereafter. N Y Tiered; 0.75% on first £3m, 0.65% on next £2m, 0.50% action including in-house funds Equities: 1.00% on first £30,000, 0.50% thereafter thereafter offices and boasts of sophisti- thenumbers.

Charles Stanley Group PLC 1 80 150 11110.580.45-0.30 600 YNService dependent N Y Fee-only cated investment strategies — Wealth managers’ fees and lieabroadrangeofapproaches investment performance are Citi Private Bank 0 75 Y N 2 to 3.5% Y N that can play a big part in notoriously hard to compare

Close Brothers Asset Management 0 100 111111% N/AY0.05% N N defining customers’ sensitive with one another, but they relationshipwithmoney. should hand you a “rate-card” Duncan Lawrie Private Bank 0 1000 1000 11110.661% first £1m, 0.5% thereafter 0 Y N Sliding scale based on asset class N Y “A lot of ‘wealth manage- upfrontwithdetailsofcharges. ment’ is merely overpriced Mr Butler says you should Equilibrium Asset Management LLP 0 100 100 1.5 1.5 1.5 1 1 0.8 2500 N/A Y Y N Fees tiered above £5m and ineffective investment establishwhatminimumcom- GAM 37.4 2000 2000 0.5 0.5 0.5 YY na N Minimum discretionary portfolio £2m management dressed up as mitment they expect from you something more comprehen- in terms of time and fees; he GHC Capital Markets Ltd 6 100 20 0.75 0.75 0.75 0.75 0.5 0.45 200 Y N/A 0.75% NY sive,” argues Jason Butler, advises favouring firms whose

Heartwood 67.9 500 1.25 1.25 1.25 1.25% first £1m, 1% on next Y Y AMC includes dealing charges and custody. NY author of the Financial Times charging structure is not £2m, 0.75% thereafter Extra charge of 0.20% on sterling equivalent GuidetoWealthManagement. linked to the arrangement of Ingenious Asset Management 2 250 Y N £25 per deal N N Fees vary with type of mandate Beyond investment, wealth productsorinvestments. managers must be able to han- Reforms introduced in 2013 Investec Wealth and Investment 1.1 100 100 1.25 1.25 1.25 1.25 1.04 0.93% 1500 Y N/A Nil N Y dle tax, inheritance, mort- under the Retail Distribution gages and pensions; they Investment Quorum Ltd 0 100 100 0.75 0.75 0.75 0.75 0.5 0.3 - 0.5 N/A N/A AMC includes dealing charges Y Y should start from the vantage ‘I think there are a point of a customer’s goals, lot of companies resting James Hambro & Partners 1 500 500 1110.8 N/A YN/ANone (clean fee) N Y says Mr Butler, a chartered on their laurels, residing JM Finn 0.3 0 0 0.75 0.75 0.75 0.58 0.46 0.75 - 0.4 250 na N Commission includes dealing charges N N £20 compliance charge per transaction. Also off er financial planner at on historic brand names’ fee-only tariff BloomsburyWealth. Killik & Co 0 0 100 1 1 0.75 0.6 0.6 negotiable £125 per quarter Y Y 1% on first £15k, 0.5% thereafter N Y Fees for discretionary: 1% up to first £500k, 0.75% on “Counsel, guidance, a criti- next £500k, 0.6% over £1m cal friend, someone to help Review banned payments of Lombard Odier 70 3000 3000 Y with strategy, project-manage commissions from product stuff, suggest some solutions if providers, but most wealth London & Capital 1000 1.25 1 0.85 Y N Nil N N that’s what’s needed — that’s managers charge a percent- McInroy & Wood Ltd 75 0 1111 Concessionary fees may apply Y N/A Passed through at cost NN what I call wealth manage- age-based fee on assets above £2m ment.” invested, leading to a risk of PSigma Investment Management 0 250 1.25 Y N Nil (clean share classes) N N 1.25% on first £2m, 1% on next £3m, 0.75% on next £5m, Individuals searching for “productpush”. 0.5% on next £10m wealth managers range from Don’t be afraid to ask for Quilter Cheviot 0 250 250 11110.50.3 YNMay be applicable in certain fee structures N Y thosewith£50,000inassetsto more information on fees and Rathbones Investment Management 2.2 100 100 1.2 1.2 1.1 0.99 0.7 0.62 Y Y N N/A those with more than £100m, even haggle, says Mr Goggin: says Lee Goggin, co-founder of whilebargainingisrareinBrit- RBC Wealth Management 58 2000 2000 1.25 1.08 0.97-0.50 5000 Y N None as standard NY the website Findawealthman- ish culture, he knows of cases

Redmayne-Bentley 0 50 50 0.85 0.85 0.85 0.85 0.85 0.85 £425.00 Y N 1.75% on transactions £1,428 to £10,000, 0.5% NY ager.com, a site that matches when it has been successful thereafter customerswithcompanies. withwealthmanagers. Rothschild Wealth Management 11 5000 5000 From 1% N/A Y N/A Discretionary fee includes management charges N Y He says the top priority for Then there is the question of users of his service is not investment strategy. Model Ruff er LLP 41 250111111 YYPassed through at cost N N investment performance or portfolios are widely available Sarasin & Partners 51 500 11110.960.87 N/A YN/ANil NN In-house funds excluded from fee structure fees, although both are impor- directly to consumers online, tant, but the long-term rela- so wealth managers must jus- Saunderson House Limited 750 Y Y Depends on platform employed N N/A Hourly rate charged for advisory services tionship with an individual. A tify the extra fees they gener-

Seven Investment Management 90 200 0.25 0.25 0.25 0.17 0.06 0 40 + VAT Y N Nil N N wave of consolidation in the ally charge compared with industry has led to upheaval these ready-made services, St. James’s Place 0 5 0 N/A N/A Nil N N/A for many clients, further high- says Holly Mackay, an inde- lightingtheissue. pendentinvestmentexpert. Smith & Williamson 4.6 0 0 0.8 0.8 0.8 0.8 0.65 0.53 0 Y N/A Fixed interest 0.4%, other investments 0.6%, Y Y Custody charges: up to £2m 0.2%, thereafter 0.15%. minimum £40. Overseas holdings £50 per Total charges for less than 2m are 1%, thereafter 0.5%, “Someone’s adviser or rela- “I went to see a wealth man- transaction no minimum fee tionship manager moving is ager and they outlined a port- Stanhope Capital 0 50000 10000 0.35% - 1.0% N/A Y External custodian Y Y Tiered fee scale oneofthebiggestproblemsfor folio that looked just the same them,” says Mr Goggin. “They as a lot of the standard ones Thesis Asset Management 0 150 1.2 1.2 1.2 1 0.6 0.52 2000 Y Y Nil N Y 1.2% up to £750,000, 0.4% thereafter. Reduced where other professionals advising the client need to know that someone’s out there — it had the 10 most

Tilney Bestinvest 11 100 50 1.25 1.25 1 1 0.5 N/A Y Y AMC includes dealing charges N/A N/A AMC charged at tiered rates plus VAT: £0-£500k 1.25%; going to be there for the long popular funds in there and a £500k-£1.25 m 1.00%; £1.25m to £2m 0.75%; above haul and they can have faith in lot of investment trusts,” £2m 0.50% themthroughthoseyears.” she said. “I think there are a UBS Wealth Management 10 1000 500 Y Y Y Y In dealing with a potential lot of companies resting on Waverton Investment Management 7.3 500 1.2 1.2 0.93 0.88 N/A N 0.15% per equity transaction N N 1.2% on the first £1m, 0.8% thereafter wealth manager, Mr Goggin their laurels, residing on his- Limited suggests asking about the his- torical brand names, and not 8 | FTMoney FINANCIAL TIMES Saturday 20 June 2015 FINANCIAL TIMES Saturday 20 June 2015 FTMoney | 9 PRIVATECLIENTWEALTHMANAGEMENT PRIVATECLIENTWEALTHMANAGEMENT

The outlook Four tough for pensions Your wealth manager won’t be seeing you now has changed dramatically pension questions since new CLIENTS access some wealth manage- well-heeled — and thus less wealth managers are also now require a client to place at andmakeslargerclientportfo- freedoms £800,000-plus ment services you need to be profitable—clientele. restricting access to their dis- least £1m with them to obtain liosmorecost-effective. were investment needed to almost 50 per cent wealthier In 2015, the survey showed cretionary services. An indi- their advice, while 22 per cent Ifthereispositivenewsatall for your adviser introduced in thanlastyear. that the average minimum vidual now needs to invest an requiremorethan£1mfordis- for those who want their April — Bloomberg access advice services TheUKwealthmanagement amount an individual needs to average £650,000 in a discre- cretionary services. This sug- wealth to be managed but can- industry continues to adapt to invest to access advisory serv- tionary portfolio service, a 27 gests that many wealth man- notgettheservicetheywant,it DAVIDBARKS the new regulatory environ- ices is £806,000, a 48 per cent per cent increase on 2014’sfig- agers are adopting a tiered is the rise of online platforms. RETIREMENTPLANNING “Takingalumpsumorincome This year’s FT Private Client ment, in which higher compli- increase on last year’s mini- ureof£517,000. service approach. If a client Over three-quarters of wealth Buying an annuity from your pension fund will Wealth Management Survey ance costs appear to be mum figure of £542,000. The One-third of wealth manag- wants an advisory service but managers surveyed saw cli- is no longer the only reduce the amount you con- reveals a startling change: to prompting firms to shun less research also shows that many ers offering advisory services cannot — or will not — invest ents’ increased use of these tribute to pensions in the the required amount, they are platforms as a positive devel- option for investors future to a maximum of offered a more cost-effective opment. More than a quarter £10,000 a year. If you are con- discretionary option. And stated that it was an area of MOIRAO’NEILL tinuing in work and wish to many of these utilise a collec- focusinthecomingyear. Following radical changes to make future contributions, tive managed portfolio The spate of new entrants in the pension rules on April 6, discuss whether this is the arrangement rather than the online discretionary space investorsmayneedtodosome most tax effective way of tak- bespokedesign. also suggests that this is an serious tax planning or re- inganincome.” Unsurprisingly, this relega- area of real innovation. And arrangement of their finances, tion in service delivery has while this may not provide the warranting a serious discus- Howwillmypensionbe upset a number of clients. Our face-to-facecontactthatmany sionwithawealthmanager. administered? wealth management bench- clients desire, it could provide Angela Murfitt, a chartered Mr Calkin says: “Most advis- mark data shows that client access to the investment financial planner at Fairstone ers will use a specialist exter- satisfaction fell from 62 to 54 expertisetheycrave. Financial Management, says: nal self-invested personal pen- percentduring2014. However, wealth managers “People should be asking their sion (Sipp) provider. It’s So will wealthier clients should beware; if they cannot wealth manager to explain the important to check whether receiveabetterservice? service them appropriately whole position from the ‘here theyareequippedtocopewith Two findings suggest they there is always likely to be and now’ to the question of thenewfreedoms. might. Firstly, there are more another provider willing to ‘whathappensintheend?’” “You should also seek reas- clientfacingadvisersperclient take the business of the In addition to the option of surance that the Sipp provider than in 2014. Over the past 12 shunned affluent. Weestimate buying an annuity, anyone has the scale and administra- months the ratio has fallen that 1.1m affluent individuals aged 55 or over can take their tiveexpertisetoensureyouare from175:1clientstoadvisersto (with £250,000–£1m investa- pensioninthreeways: paidproperly.Theflexibilityis 161:1, notionally suggesting ble assets) in the UK have 3One lump sum, with 25 per encouraging people to think of that advisers will have more £700bnintotalassetsbetween cent tax-free and the balance their pension like a bank timetoattendtoclientneeds. them; a valuable market for taxed at your highest marginal account, but if you are taking Secondly, annual fee tariffs those willing to invest the time incometaxrate; your income gradually over on discretionary portfolios andmoneytoservethem. 3Adhoclumpsums; time rather than as a lump over £1m have fallen by an David Barks is an associate 3 Tax-free cash and/or an sum, then it creates some average 5 basis points. This director at Wealth-X Custom income under the new flexi administrative complexity. may reflect increased compe- Research (formerly Ledbury accessdrawdownrules. The Sipp provider will have to tition in the market for clients Research), the global provider of Here are four key questions earmark different pots, taking that providers really want to wealth intelligence and research toask: taxatsourcewherenecessary.” attract and retain. It also sug- partner of the FT Private Client gests recent market consolida- Wealth Management survey for Whatisthebestwaytotakean How can I pass pension assets tion has limited cost increases thepastsixyears income? tomyfamily? Before April 6, many people Any policyholder who has were advised to draw an nominated a beneficiary and Top performers Partners, with 7.45 per cent. income from their pension dies before the age of 75 now In the longer term, though, before touching other assets. has the option of passing on Rothschild and Canaccord Genuity showed However, Ms Murfitt says: “In their pension as a tax-free Canaccord lead pack an edge over its rivals, the past it seemed sensible to lump sum, or to their nomi- returning 33.52 per cent over spend ‘restricted assets’ such nee’spensionfund. Wealth managers may have the three years to the end of as pensions first in favour of After 75, the fund can be struggled to generate alpha 2014 and 47.52 per cent over preservingIsapotstogainflex- paidasalumpsumsubjecttoa in 2014, but rising markets five, making it the top ibility,keepcontrolandreduce 45 per cent tax charge or the and low inflation meant they performer over both periods. theriskoflosingoutifyoudied monies can be passed to a were able to generate Among growth portfolios, too soon. This argument has nominee’s pension with the positive returns for clients. McInroy & Wood and turnedonitshead.” incomethentaxedattherecip- The average balanced Arbuthnot Latham led Charles Calkin, head of ient’s marginal tax rate from portfolio returned 5.02 per the pack in 2014, returning financial planning at James April 2016, but at 45 per cent cent during the year, and the 7.3 and 7.2 per cent Hambro&Co,says:“Formany thispresenttaxyear. average growth portfolio respectively. McInroy, a people it is now better to draw Dion Lindskog, head of 6 per cent, according to the Scottish discretionary firm, non-pensionassetsfirst.” wealth structuring at RBC latest survey by WealthX and was the strongest five-year Wealth Management says: the Financial Times. Both performer, returning 57.3 per What risks do I face in taking “The death benefit changes types of portfolio were ahead cent. income? now mean that pensions are of the FTSE All World index, For some wealth managers, Mr Calkin says: “You can do oneofthebestinvestmentsfor which gained 3.35 per cent. 2014 was less than plain much more with pensions long-termfamilywealthtrans- Rothschild Wealth sailing. Redmayne & Bentley now, but with that freedom fer. With tax relief on the con- Management offered the was the only firm to produce comesrisks.Youneedawealth tributionsandthetax-efficient strongest-performing a negative return in its manager capable of delivering growth, even small contribu- balanced portfolio of those balanced portfolio, which strong performance — with a tions can turn into significant that disclosed figures: it shed 2.52 per cent, though its record of preserving and amounts that can be passed to returned 7.52 per cent to five-year performance was enhancingwealth.” futuregenerations.” investors during the year, among the strongest at Steve Wood, a wealth closely followed by Sarasin & 45.13 per cent. Judith Evans adviser at Canaccord Genuity Moria O’Neill is personal finance Wealth Management, says: editorofInvestorsChronicle 10 | FTMoney FINANCIAL TIMES Saturday 20 June 2015 FINANCIAL TIMES Saturday 20 June 2015 FTMoney | 11 PRIVATECLIENTWEALTHMANAGEMENT PRIVATECLIENTWEALTHMANAGEMENT Services Bonds bull market charge runs out of steam

FIXEDINCOME investors in just over a month ofstress,althoughequallythey assets such as Qatari govern- Mr Morris, because the bonds While the wealth manage- Yields are so low that and a half, with knock-on may not rise to the same ment bonds and so-called avoid the “hot money” effect ment industry evolves in the effectsinglobalmarkets. degreeinbullmarkets. “dim sum bonds”, fixed of major investors pouring face of volatility and illiquidity many suspect that To make matters worse, Lee Morris, senior fixed income securities issued out- intoandoutoftheassets. infixedincomemarkets,these ices the only way is up liquidity is scarce in many interest investment manager side of mainland China, but Buying short-dated bonds tacticsremainuntested. bondmarkets. at Canaccord Genuity Wealth, issuedinChineserenminbi. and holding them to maturity For some investors, the next JOHNKENCHINGTON Stewart Richardson, chief is another manager focusing By buying up bonds that do is another way to cut out the bond market downturn may shore services shore

Wealth manager Wealth Number of UK off advisers/relationship Number of client-facing managers in UK joining in 2014 Advisers individual clients Active (£m) AuM Advisory (£m) AuM Discretionary (‘open market entire from recommended Products architecture’) universe selected from recommended Products architecture’) (‘guided only In-house products management investment Discretionary management investment Advisory Brokerage equity Private Hedge funds (including fund of funds) Commodities planning Tax planning & estate Trust planning & retirement Pensions planning Philanthropic Insurance Banking Mortgages Other lending Charity services Off Concierge Online services Once seen as a rather unevent- investment officer at RMG on diversifiers to tackle the not feature on major invest- volatility, he says, as you are provetobeatantrumtoofar.

ACPI Investments 2 8 2 193 1000 1500 X X X X X ful corner of the investment Wealth Management, says tantrums. mentindicessomeoftheworst not exposed to the volatility of John Kenchington is the editor world, fixed income is now the central banks have artificially He says the firm is adding volatility can be avoided, says secondarymarkets. ofInvestmentAdvisermagazine Adam & Company 4 20 4 1400 1250 X X X XXXX X subject of high-drama head- inflated price “bubbles in

Arbuthnot Latham 3 40 4 4900 200 668 X XXX XXXXXX XXXXXX X lines, declaring “taper tan- nearly all major assets and trums” and “bond blood- some minor and alternative Barclays Wealth and Investment Management 24 400 40000 14000 X XXX XXX XXXXXXXXXXX baths”. onesaswell”.

Brewin Dolphin 28 441 6 70000 4800 24800 X X X XXXXX XX The cause of the volatility “This combination of has been the extraordinary extremely overvalued assets Brooks Macdonald Asset Management 10 144 23 15198 6228 X X X X X response of the world’scentral with poor liquidity becomes a

Canaccord Genuity Wealth Management 5 107 15 12000 4200 7100 X X X X X X X X X X X bankstothe2008financialcri- major problem when enough sis. By slashing interest rates investors want to cash in their Cazenove Capital Management 6 83 1 5212 743 20422 X X X XXXXXXX XXXXX X and pumping billions into chipsandfindtherearesimply bondmarkets,centralbankers not enough buyers at market Charles Stanley Group PLC 27 286 63 50000 4700 8500 X X X X XXXXX XX X createdaonce-in-a-generation prices,”saysMrRichardson. Citi Private Bank 5 82 37 17700 2565 X X X X X X X X X bullmarketinfixedincome. “At the same time, regula- Yields are so low in some tors have changed the struc- Close Brothers Asset Management 8 131 1 65000 9700 X X X X X X X X markets that some now fear ture of markets, which has Duncan Lawrie Private Bank 4 23 8 4200 33 702 X X X X X X X X X the only way is up — and when caused liquidity to become yieldsrise,pricesfall. muchmorescarce.” Equilibrium Asset Management LLP 3 6 0 675 65 365 X X X X X X X X In early May, analysts at While central bankers were GAM 11104071601770X XX X XX Morgan Stanley bearishly pre- pumping in cash, regulators dicted that the US Federal responded to the 2008 crisis GHC Capital Markets Ltd 3 7 0 3700 53 346 X X X Reserve, the European Central by imposing stringent capital Heartwood 2 29 9 2233 60 2004 X X X X X X X Bank and the Bank of Japan requirements on banks, forc- would all tighten their mone- ing them to hold cash instead Ingenious Asset Management 1 12 3 1700 1748 X X X X tary policies in 2016 if growth of“riskassets”suchasbonds. Investec Wealth and Investment 15 393 24 60000 5864 20115 X X X X X X X X X continuedtopickup. In doing this, the regulators When markets suspect cen- planned to turn the banks into Investment Quorum Ltd 1 5 2 412 58 126 X X X X X X X X tral banks will raise rates or safe and sturdy institutions, James Hambro & Partners 1 16 1 1478 419 1080 X X X X X X X X X taper asset purchasing pro- but the bond markets have grammes this drives up bond beenleftwithadearthofavail- JM Finn 6 90 0 15000 1903 5195 X X X wX yields. In other words, they able buyers at times of stress, Killik & Co 9 82 9 22000 2915 803 X X X X X X X X X X X X throwatapertantrum. leadingtolossesforinvestors. Morgan Stanley went so far Wealth managers are being Lombard Odier 1 20 0 X X X X X X X X X as to warn that 2016 could be forced to rewrite their invest- London & Capital 1 30 5 700 2600 X X XXX X X the year of the “triple taper ment rules books in response tantrum” in bond markets, as tothesedualpressuresinbond McInroy & Wood Ltd 2 8 0 700 1073 X X interest rates rise and today’s markets.

PSigma Investment Management 3 20 1 3274 2296 X X historic low yields become a Private client giant Rath- thingofthepast. bones has introduced a new Quilter Cheviot 11 165 10 37500 10823 720 X X X In fact, by the time the model, known as LED, under

Rathbones Investment Management 15 262 41 34122 2000 22700 X X X X X X X X X X X report came out the German which portfolios are split into government bond market was three distinct portions — RBC Wealth Management 6 120 10 1713 2737 1974 X X X X XXXXX X XX already throwing its own tan- liquidity assets, equity-type

Redmayne-Bentley 37 88 4 58096 575 786 X X X X X trum. The supposed safest assetsanddiversifiers. assets in Europe saw their Bryn Jones, fixed income Rothschild Wealth Management 3 41 5 1409 421 5600 X X X XXX X X XXXXX X yields surge from lows of 0.05 fund manager at Rathbones,

Ruff er LLP 3 33 2 4049 5820 X X X per cent in April to above the 1 saysthenewapproachensures percentmarkbyearlyJune. all client bond portfolios have Sarasin & Partners 2 19 1 850 2400 X X X This translated to roughly a a significant portion invested 7 per cent price fall suffered by in liquid assets. This ensures Saunderson House Limited 1 45 0 1600 3696 X X X X X X X that reasonable prices can be Seven Investment Management 2 40 6 15600 5577 2144 X X X X X X achieved, in the event that assetsmustbesoldoff. St. James’s Place 22 2835 264 239000 55800 X X X X X X XXXXXXX MrJonessaysthemodelalso Smith & Williamson 6 167 9 16000 2783 10441 X X X XXXXXXX X XXX discourages investment managers from assuming bonds Stanhope Capital 2 20 2 150 3000 3200 X X X X X with currently low yield levels Thesis Asset Management 4 14 2 3500 9800 X X are therefore the safest and most liquid assets around, a Tilney Bestinvest 40 150 10 70000 1612 5738 X XXX XXXXXX XXXX X potential pitfall with tradi- UBS Wealth Management 7 240 20 X XXX XXXXXXXXXX XX X tionalbondriskmodels. The presence of “diversifi- Waverton Investment Management Limited 1 22 3 2500 3843 X X ers” reduces the risk of suffer- ing painful losses in a market shock. Totals 337 39 31 11 10 14 11 19 23 23 14 5 13 8 12 27 27 4 17 Diversified assets are those % off ering services 93% 74% 26% 24% 33% 26% 45% 55% 55% 33% 12% 31% 19% 29% 64% 64% 10% 40% Bond markets have been hit that tend not to fall in price in by huge volatility line with other assets at times 12 | FTMoney FINANCIAL TIMES Saturday 20 June 2015 PRIVATECLIENTWEALTHMANAGEMENT Are you getting fair value for money?

FEES December that 36 per cent of mation,thisdoesnotnecessar- On disclosure, more change — in a single aggregated figure. There are also potential con- Clients are still wealth managers were not giv- ily translate into a desire to is looming. New European Thiswilltakeeffectin2017. flicts between different Euro- ing clear examples of initial pick the cheapest. Find- rules under the second instal- TheWMAarguesthiswillbe peanrulesoncostdisclosure. finding it hard to charges and half were unclear awealthmanager.com found ment of the Markets in Finan- hard to achieve, both in terms However, Mr Barrass compare costs aboutongoingcosts. people were specifically con- cial Instruments Directive of sourcing the information believes negotiations over the John Barrass, deputy chief cerned with value for money, (Mifid II) will force wealth and developing systems to new rules will “come out in JUDITHEVANS executive of the Wealth Man- while Mr McGinnis sees little managersandprivatebanksto process it. Of particular con- the wash” to the benefit of What price tag should be agement Association (WMA), downward pressure on fees in reveal all costs — including cern is a requirement to pre- consumers, offering “some attached to wealth manage- saysthereis“moretobedone”. the market catering for inves- transaction costs and third- dict the impact of costs on the degree of comparability” ment, and do its customers get “The rate cards are all differ- torswith£250,000ormore. party payments like fund fees future value of investments. betweenfirms. what they pay for? These are ent according to the business not simple questions to model . . . Comparability is answer, but thanks to a series veryhardtoachieve,”hesays. ofregulatorychanges,theyare One problem is the range of beingaskedmorefrequently. different costs that come into Charging structures were play, including upfront fees, transformed two years ago exit fees, transaction charges when the Retail Distribution and third-party costs. But Review forced wealth manag- campaigners such as the True ers to charge clients directly, and Fair campaign argue that rather than through commis- thisissimplyobfuscation,with sions from product providers. companies unwilling to put Whilesomealreadyusedafee- theircostsinblackandwhite. based model, RDR forced the They may face pressure resttojointhem. from prospective clients. “In terms of removing con- Research by the website Find- flicts of interest between awealthmanager.com found advisers and the funds they its customers expressed a recommend, that has without strong desire for a figure that doubt been a positive,” says genuinely represented total Paul McGinnis, analyst at costs and for “a simple way to ShoreCapital. compare the fees of several “The regulator may have wealthmanagers”. expected the industry to move Analysis by Numis Securi- to charging for time spent, like ties indicates fees vary widely, lawyersandaccountants,buta but that the services of a largeportionofthemarkethas majority of wealth managers continued with percentage- surveyed cost more than 2.5 basedcharging. per cent a year of customers’ “It’s not clear to me that assets; total fees stretched as costs have fallen much, but it’s high as 7.5 per cent for short alotmoretransparentnow.” periods of investment. Among Wealth managers now hand cheaper firms are Nutmeg, the prospective clients a “rate online wealth manager, and card” detailing their fees, but SCM Private, which both the Financial Conduct Author- chargeclosertoonepercent. ity,the City regulator,found in Whilecustomerswantinfor-

Tax pipeline Isas The government is investors face committed to allow peer-to- key changes peer investments and listed bonds issued by co-operative Pension tax relief and community benefit This will only affect those societies in the tax-efficient earning above £150,000 a savings products. year as the government cuts the amount the highest Capital gains tax earners can save into their Capital gains tax is seen as pension tax-free each year vulnerable to tax raising from £40,000 to £10,000. changes. While higher rate taxpayers pay CGT — “B” shares payable on profits arising Shareholders no longer from the sale of assets — at enjoy a tax advantage 28 per cent, before 2008 the through special purpose tax was payable at a marginal share schemes. Previously, income tax rates. UK-listed companies could issue “B” shares to investors, Entrepreneurs’ relief subsequently repurchasing This tax break, allowing them, offering a more tax- those disposing of a business efficient return on capital to pay CGT on profits at 10 than dividends. Any such per cent, is under scrutiny for returns are now taxable as costing billions more than dividend income. forecast. Adam Palin