FTWEEKEND Saturday June 15 / Sunday June 16 2013 Private Client Wealth Management An FT Money Guide

Managers face tough choices in new era of financial advice

Chris Tosic Equities Bonds Charging Waiting for the Great Rotation What’s the alternative? Set fees dominate Pages 2 & 3 Pages 6 & 7 Page 15 2 FINANCIAL TIMES SATURDAY JUNE 15 2013 FINANCIAL TIMES SATURDAY JUNE 15 2013 3 Money guide: Private client wealth management Money guide: Private client wealth management

unwound, all of these asset phenomenon of ‘boring but Dull but classes are likely to benefit worthy’ sectors such as util- worthy? from supportive macro pol- ities, healthcare and con- Unilever and Great rotation? More like a capitulation icy and technical condi- sumer staples leading the the like tions. However, this is not a market higher in the recent have led signal to charge into high- rally,” he says. Shares in the market for risk is slowly emerging survey of wealth managers saving rates on offer. the financial data provider, best-selling sector for indi- beta stocks, but to remain companies like Diageo, Uni- higher Strategies among private investors. bear this out. Most manag- “Before the crisis, cash highlight how far cash rates vidual savings accounts focused on high-dividend lever and GlaxoSmithKline Bloomberg While there has been a ers have increased exposure deposits paid about 6 per have fallen. The average money in the most recent companies for equities and are trading at relatively Investors are rise in flows into the stock to equities, but this has not cent and inflation was sig- one-year fixed-rate bond tax year was the sterling rising stars in the high rich multiples. market this year, most generally been at the nificantly below that, so paid out 5.73 per cent in strategic bonds, according yield and emerging market Becket says private inves- switching out of experts put this down to expense of bonds – alloca- investors didn’t really have June 2007, compared to 1.66 to the body, which repre- debt space,” he says. tors have given up on the cash into riskier investors moving money tions to fixed income have to take any decision. You per cent today. sents the open-ended funds Kevin Gardiner, chief quest for growth over the from cash, rather than increased too. Cash is the could happily sit on that While some cash has gone industry in the UK. investment officer for last few years, as they have assets, writes bonds, as investors tire of only asset class to see year- and not really bother with into equities, wealth man- According to Sanjay Europe at Barclays, is scep- become increasingly Tanya Powley rock-bottom deposit rates. on-year declines. investing,” she says. agers note that it has not Joshi, head of fixed income tical that private investors obsessed with income. He “There is no clear sign of Experts say the exit from However, with cash rates yet resulted in the much-an- at London & Capital, the will ever opt to sell their notes that emerging mar- a decisive move away from cash is long overdue. Susan plummeting in recent years, ticipated “death of bonds”. discretionary wealth man- bond holdings. “Where they kets, for instance, have fixed interest by investors,” Boyd, investment director investors have had to take Figures from the Invest- ager, alongside equities, own them, in many cases underperformed developed Talk of a “great rotation” notes Tom Becket, chief at wealth manager Adam & on more risk if they want to ment Management Associa- high yield and emerging those bonds have done such equities for much of the from bonds to equities is investment office at Psigma Company, says investors achieve a real return on tion corroborate the find- market debt has attracted a good job for investors in past two years. However, as premature, say wealth man- Investment Management. have been forced up the their money, says Boyd. ings of FT Survey of Lead- new investment. “As cash maintaining and growing most of the obvious “value” agers, but a greater appetite The results of our annual risk curve due to the paltry Figures from Moneyfacts, ing Wealth Managers. The holdings are further their real wealth that they investments have become are almost viewed as family expensive he says it is time retainers,” he says. to focus on longer term Performance “Our advice is to focus on opportunities. % total returns of balanced portfolios % total returns of capital growth portfolios other investments for new Nick Murphy, investment money but realistically management partner at Wealth manager Over 1 year Over 3 years Over 5 years Over 1 year Over 3 years Over 5 years we’re not going to see many Smith & Williamson, Adam & Company † 10.3 27.4 22.9 11.11 29.53 22.56 private clients dumping agrees. “The valuations of Arbuthnot Latham & Co., Limited 12.85 14.02 4.97 12.75 15.88 6.16 stocks in many of these so- called defensive sectors are Ashcourt Rowan 7.8 11.5 7.1 7.1 ‘A rare phenomenon becoming stretched relative Berry Asset Management PLC † 9.8 19.3 16.2 13.8 of boring but worthy to history – the adage that Brooks Macdonald Asset Management † 9.4 18.1 14.6 9.6 17.9 12.6 there is no sector that can’t Brown Shipley 13.8 19.7 9.2 10.1 12.9 7.5 sectors, such as be ruined by too much C. Hoare & Co. † 8.7 22.4 19.2 11.8 24.9 14.9 utilities, leading the money is starting to be a Canaccord Genuity Wealth Management 9.27 23.5 21.1 7.52 22.8 15.9 concern,” he says. market higher’ So where are the long- Cazenove Capital Management † 9.4 19.5 19.8 10.7 22.1 17.3 term opportunities? Becket Charles Stanley Group PLC 29.6 30.8 points towards under-priced Citi International Personal Bank, UK 8 21 24 9.5 23 23 growth companies in City Asset Management Plc † 8 14.5 16.3 8.3 20.3 29.2 bonds wholesale,” adds Gar- Europe, Japan and the Coutts 5.8 11.3 12.8 diner. emerging markets. “Some David Absolon, invest- of these assets, such as Dart Capital 6.71 10.75 10.1 16.4 ment director at Heart- industrial and financial Duncan Lawrie Private Banking † 10.7 21.1 10.8 26.9 wood, agrees. “Investors companies, are trading on Equilibrium Asset Management 11.1 17.3 23.4 11.7 16.7 remain desperate for relative valuations that GHC Capital Markets Limited 15.43 22.59 25.74 20.8 35.27 29.46 income and bonds, while have rarely been seen Greystone Financial Services 14 20.3 9.1 13.1 22.4 20.8 producing low yields by his- before and present out- toric standards, are still standing value,” says Heartwood Investment Management 7.9 15.5 17.5 10.7 16.7 19.1 producing returns. In some Becket. Ingenious Asset Management † 7.03 17.98 12.59 7.89 19.46 11.87 sub-asset classes these are Many wealth managers Investec Wealth & Investment † 10.43 20.72 16.77 11.61 21.92 14.88 still compelling in the cur- believe long-term opportu- Investment Quorum Ltd 10.87 17.77 20.64 11.95 19.17 19.2 rent climate.” nities lie in Europe and JP Morgan Private Bank This focus on yield has Japan. Citi Private Bank led more investors to the has been overweight in Jupiter Asset Management † 8.47 18.03 8.92 17.68 stock market. According to Japan over the past year Killik & Co Becket, most new money and continues to remain Kleinwort Benson † 7.92 18.89 7.57 17.69 coming into equity markets positive on the market Lombard Odier & Cie. has focused on high quality, there, says Alexander God- London & Capital Asset Management Ltd 9.3 15.1 9.1 14.8 defensive equities. win, global head of asset “This has led to a rare allocation at the bank. McInroy & Wood Ltd † 11.4 30.4 44.8 11.4 30.4 44.8 NW Brown Psigma Investment Management † 7.51 16.22 18.89 7.88 17.11 17.02 Quilter Cheviot † 9.15 21.18 18.85 10.58 21.36 12.59 Cashing out Rathbone Investment Management 9.35 22.8 23 10.3 22.9 21.3 The move of money out of had fixed-term cash RBC Wealth Management † 9.48 19.52 28.86 10.89 21.22 26.26 cash savings into riskier deposits that have recently Redmayne-Bentley assets will gather pace in expired and where current Rothschild † 7.7 16.2 20 7.4 13.6 12.4 the coming year as private rates are pathetically low.” Ruffer LLP 4.6 22 59.8 investors fight a losing Susan Boyd, investment Saunderson House Limited 11.09 20 21.38 11.75 19.52 16.73 battle against inflation, director at wealth manager Schroders Private Banking * † 4.4 13.2 16.4 6.6 13.9 15.8 writes Tanya Powley. Adam & Company, says Savings rates have fallen savings rates have Seven Investment Management † 9.22 14.02 15.47 10.47 14.8 13.85 from almost 5.75 per cent worsened in the past year, SGPB Hambros 7.76 16.32 28.67 8.16 14.94 11.08 for a one-year fixed-rate largely as a result of the Smith & Williamson † 10.17 24.69 30.5 10.66 23.95 30.02 bond in June 2007 to Funding for Lending scheme Thurleigh Investment Managers around 1.66 per cent today, launched last August. Towry 6.1 11.8 11.1 6.7 12 16.5 forcing many investors to “Initially in the first few reassess their cash years of the downturn UBS holdings. banks were bidding up for Vestra Wealth 10.04 16.8 11.5 Tom Becket, chief cash deposits so the real Walker Crips investment officer at return available on cash Average 9.2 18.8 21.1 10.3 19.6 18.6 Psigma Investment didn’t reflect the Libor Max 14 30.4 59.8 13.8 35.27 44.8 Management, says money rate,” she said. “It’s will continue to move out of definitely changed now as Min 4.4 10.75 4.97 6.6 7.1 6.16 cash in coming months. banks have got their loans Notes “We have seen new cash to deposits into line, and * Do not disclose total return fi gures after fees, therefore provived fi gures for the balanced portfolios and capital growth portfolios are with fees includedBentley stated that fi gures were not applicable or available. Brown Shipley, added by clients to their that’s left deposit clients † Indicates ARC–compliant data. The ARC Measure indicates those firms whose performance figures have been independently calculated by Asset Risk Consultants (ARC), following analysis of that firm’s actual private client portfolios in recent months, really looking at returns portfolio returns. As a result, such performance figures can be considered to be a true and accurate reflection of the average private client investment experience. ARC is an international independent investment consultancy especially from those who significantly below inflation.” with a proven expertise in research private client discretionary investment managers. For more information, visit www.assetrisk.com. 4 FINANCIAL TIMES SATURDAY JUNE 15 2013 FINANCIAL TIMES SATURDAY JUNE 15 2013 5 Money guide: Private client wealth management Money guide: Private client wealth management Fewer clients, but Managers rethink portfolio choices

active managers almost In 2008, active fixed-income wealth managers. The this has effectively allowed to access. “ETFs can offer increased assets Passive funds exclusively three or four managers were reluctant to growing range of ETFs that Heartwood to take positions broad exposures to asset years ago, whereas virtually invest in investment-grade is available makes it much in credit default swap classes, such as commodi- Disenchantment all do due diligence on ETF financial bonds even easier to express a far markets. ties, as well as very specific the number of relation- loading of clients on to providers and their prod- though they were heavily wider range of investment Echoing this point, Jamie- themes, say to a metal such Trends ships. advisers – is one that is with stockpicking ucts,” says Jamieson. oversold, but Heartwood themes than before,” says son says ETFs have pro- as palladium. This is a huge In Ledbury’s Client Land- carefully managed by pro- leads to rapid growth The huge range of ETFs was able to find an ETF Absolon. vided wealth managers benefit to investors,” he The average wealth scape 2013, we reported that viders to deliver the service and trackers funds means that offered a meaningful He adds that some clients with access to asset classes, says. of index trackers management client almost one-third of the levels required. that it is straightforward to exposure to that sub-sector. are not mandated to use such as commodities and managed wealthy in the UK Other things that should and ETFs, writes build and implement fairly “Active strategies are no derivatives but because currencies, that were previ- Chris Flood is a reporter for has £870,000, says have most of their investa- be of interest to HNWIs in sophisticated asset alloca- longer the default choice for ETFs are listed securities, ously much more difficult FTfm ble wealth with their main the results are the mini- Chris Flood tion models that can be Stuart Rutherford providers – the highest for mum portfolio levels readily tweaked if a wealth many years. So an element required for advisory and manager decides that a par- of this fall is simply wealth discretionary management, Growing awareness of the ticular country or sector or While the wealth manage- managers having fewer cli- which show some subtle impact of charges on long- even investment style looks ment industry may have ent relationships, rather shifts, and providers’ new term returns for investors appealing at that time. arrived safely in the post- than the industry having RDR classifications – either means that low-cost index Gareth Lewis, head of retail distribution review fewer clients. “restricted” or “independ- trackers and exchange investment management at (RDR) world, the journey Encouragingly, for an ent”, although whether traded funds (ETFs) are Bestinvest, says that his has not been without loss. industry charged with man- these terms mean that playing an increasingly company aims to add value Evidence is to be found in aging clients’ wealth, assets much to individual clients important role in portfolios through both manager empty bankers’ desks and under management (AUM) remains a moot point. run by wealth managers. selection and asset alloca- less busy client meeting at the end of 2012 were sig- What many will also “Wealth managers are tion decisions in its multi- rooms. nificantly higher than a examine given the impor- looking at ETFs and passive asset funds. The first FT Survey of year ago. A like-for-like tance of personal contact funds to keep costs down as About 70 to 80 per cent of Leading Wealth Managers analysis shows that AUM when it comes to wealth they move to fee-based mod- Bestinvest’s assets are still since RDR came into effect was up 10 per cent over this management is office loca- els,” says Neil Jamieson, actively managed. But shows that the biggest period, despite the reported tions. The fact that the head of UK & Ireland, ETF Lewis says Bestinvest pre- change to the industry is squeeze on client numbers. industry has expanded its Securities. fers tracker funds for asset the fall in the number of Returns on assets have office network since last The Investment Manage- classes such as US large-cap active private clients served been a big driver of this year is unquestionably posi- ment Association reported equities, where it is more in the UK and client facing increase, with the average tive. Over the past 12 that assets held by tracker challenging for active man- advisers – both are down by balanced portfolio produc- months there has been a 9 funds in the UK stood at a agers to outperform the 2 per cent on a like-for-like ing total returns of 9.2 per per cent increase in the record £57.4bn at the end of benchmark indices. basis compared with one cent over 2012. number of wealth manage- last year. But trackers’ “We have always used year ago. As things stand among ment offices across the UK, Wealth management offices are springing up throughout the UK Getty share of total funds under trackers but it is important The decline in bankers providers participating this with the Midlands and East management was just 8.7 to have clear views on the bears out concerns about year, the average client Anglia and the North West per cent, suggesting sub- underlying investment,” the challenging training serviced by the industry among the many regional investment manager, found has the ability to influence mism in the investment stantial room for growth. says Lewis, noting that requirements of RDR and has £870,000 in wealth. The beneficiaries. a moderate improvement in or frame the perception of environment. This is the Retail sales of trackers Bestinvest would not cur- cost pressures. The reasons average adviser, mean- While these industry satisfaction towards their all other experiences. It time for wealth managers fell 28.6 per cent to £1.5bn rently favour using a FTSE behind the decline in cli- while, serves 165 clients, a numbers are useful in main providers and con- plays a vital role in setting to begin conversations last year from a record 100 tracker given that ents are less obvious. In similar level to last year. describing the nature of the tacts. This is important for and maintaining expecta- about investing or increas- £2.1bn in 2011. index’s heavy exposure to part they are the result of This second number – the industry and its transition, the industry, since it tions, through to smoothing ing portfolio exposure to The drop seems counter- mining and resources key players prioritising they only hint at how suc- impacts on client retention things over when they go riskier assets with clients, intuitive given the anecdo- stocks, which are suffering some clients over others in cessful providers are at and share of wallet, and awry, and it should be a or at least to engage them tal evidence of growing because of weaker growth pursuit of improved One key driver of servicing their clients. To secures referrals and recom- focus area for the industry on what risk actually interest in passive invest- in the Chinese economy. returns. Additionally, Led- satisfaction that provide insight into the atti- mendations from clients. during the next 12 months. means to help take some of ment strategies. However, So while ETFs and pas- bury Research’s tracking of tudes of the wealthy, Led- One key driver of satisfac- Another opportunity for the fear out of investing the IMA data covers only sive funds offer an easy the high net worth individ- comes up in our bury regularly conducts tion in our research is cli- wealth managers is in and build an appreciation of open-ended funds and does way to drive down charges, ual (HNWI) population in research is client large-scale surveys in the ent communication and this catering for rising levels of the opportunities. not include ETFs. UK listed investors need to be aware the UK reveals that HNWIs UK. Our research among is particularly relevant in investment optimism ETFs gathered inflows of that costs are only one fac- place more of their wealth communication 500 wealthy individuals light of changes to the among the HNWI popula- Stuart Rutherford is £16.2bn in 2012 and have tor in determining overall with main providers – and who make use of a wealth industry and the banker tion. We’ve found increases research director of Ledbury attracted a further £5.7bn so returns, says Lewis. in some cases are culling manager or full service base. Good communication in HNWIs’ levels of opti- Research far this year, according to David Absolon, invest- ETFGI, a consultancy. ment director at Heart- Jamieson says the speed wood, says the choice of of the shift is hard to quan- ETFs has given wealth tify, but disenchantment managers “a much richer with stockpicking and an palate” when making tacti- awareness that asset alloca- cal investment choices. tion choices are key drivers Last year, Heartwood of returns, are leading opted to buy an ETF that wealth managers to imple- focused on semiconductor ment investment ideas via makers, because the active index funds and ETFs. managers that it considered “Research teams at would only offer a broad wealth managers looked at technology sector exposure.

UK tracker fund assets hit a record £57.4bn last year AP 6 FINANCIAL TIMES SATURDAY JUNE 15 2013 FINANCIAL TIMES SATURDAY JUNE 15 2013 7 Money guide: Private client wealth management Money guide: Private client wealth management

certainty, and for pension tenant demand and poten- them to rise by a further 6-7 Average asset allocation advisers to match assets to tial supply overhangs are per cent in each of the next Balanced funds 9% 6% Growth funds future liabilities,” says now pretty well priced two years. Other 4% 3% Bonds cornerstone of wealth preservation Peter Botham, chief invest- into asset values outside Botham suggests that Cash Commodities ment officer at Brown Ship- the prime areas of central portfolios based on strongly Commodities 4% ley. “This is a trend which London.” cash generative companies 5% repression” on a grand ing that such bolts from the years of extraordinary losses in government bonds sovereign bonds as ‘insur- is unlikely to reverse.” Growing interest in real with yields of 3 per cent of Hedge funds Fixed incomes Hedge funds 8% scale. Inflation in the UK blue are not the style of money policy, slow growth especially. “The low returns ance’ within a client portfo- Higgins says investors estate is reflected in the more and the prospect of 9% has been above the Bank of Ben Bernanke’s Federal and fiscal contraction mean from fixed-income this year lio, although we have need to reassess their prior- performance of the quoted rising dividends in the Equities Equities Private equity In spite of the England’s 2 per cent target Reserve. Others note that that monetary conditions suggest to us that the 30- reduced these weightings ities. “It will be crucial for sector. The FTSE real estate future “will be able to cope Private equity 58% 74% 8% 4% for years, peaking at over 5 the high yields of the 1980s, are nowhere near loose year bond bull market has compared to last year,” says investors to find new ways sub-index, which includes with the need to preserve 3% disappointing yields, per cent in 2011. 1990s and early noughties enough.” come to an end and we see Hills, while at Canaccord, to manage risk in their pur- companies such as British client wealth”. Such compa- 12% 10% alternatives are “Markets have never been were anomalous when set Alan Higgins, chief a less benign stage ahead, Jukes agrees, saying that suit of yield,” he says, sug- Land, Hammerson and nies tend to be large and Property 15% more challenging and asset against longer term trends. investment officer at which is negative total gilts and investment-grade gesting corporate bonds, Land Securities, has risen concentrated in defensive unappetising, writes 5% Bonds: corporate Property allocation has never been Yields on “consols” – the Coutts, says he is growing returns from lower-risk corporate bonds “offer the absolute return strategies by almost a quarter over sectors such as utilities, 4% more difficult,” complains forerunners of gilts – increasingly concerned at bonds.” lowest cost risk mitigation and floating-rate or infla- the past year, slightly consumer goods, tobacco Bonds: government Jonathan Eley Source: Ledbury Research Thomas Becket, chief remained at about 3 per the prospect of capital However, the growing strategy for multi-asset tion-linked securities. ahead of the 20 per cent and pharmaceuticals. investment officer at cent or less for decades dur- concern about bond valua- portfolios”. Psigma’s Becket agrees: rise posted by the FTSE All- It was all so easy in the Psigma. Robert Farago, ing the 19th and parts of tions does not yet seem to The alternatives are not “Inflation-linked corporate Share index. However, the 1990s. With yields on even head of asset allocation at the 20th centuries. be reflected in asset alloca- much more appetising, bonds, asset backed securi- average exposure to prop- the safest government debt Schroders Private Bank, “We expect cash and gov- tion decisions. Our survey especially for those who ties and floating rate notes erty in balanced portfolios comfortably north of 5 per adds there “is nothing out ernment bond returns to of 47 wealth managers think inflation may become all provide some protection remains slim at 4.6 per cent, cent and inflation subdued, there that’s screaming to remain at sub-inflation lev- found that, on average, allo- more of a problem in the against rising inflation and while in growth portfolios preserving wealth was rela- be bought”. els for the coming years,” cations to sovereign bonds future. The obvious defence interest rate hikes. Inves- it was smaller still, at 4.4 tively straightforward. The Recent volatility in the remarks Ed Allen, a partner in balanced portfolios had against rising prices, index- tors would do well to pro- per cent. precise opposite scenario Treasuries market in partic- at Thurleigh. Some think increased by 2.1 percentage linked government bonds, tect against these risks Structured products, prevails today. ular has invoked some com- yields could even sink fur- points, and corporate bonds have been in high demand while insurance is still mod- absolute return strategies Yields on quality 10-year parisons with 1994, when a ther. “Policy rates should, if by 1.8 percentage points – for some time and trade at erately priced,” he says. and infrastructure vehicles government bonds have sudden and sharp rise in anything, be lower, not mostly at the expense of rich prices. Some are also looking at are other alternatives. For only briefly popped above 2 official interest rates higher, than they are right cash. In the growth portfo- “Detractors of index- real estate. In contrast to the first time this year, per cent during the past few prompted a big sell-off in now,” thinks Robert Jukes, lios, the increases were 3.9 linked gilts point to their residential real estate and we asked respondents to years as governments and US government bonds and a global strategist at Canac- and 4.6 percentage points negative real yields, but other asset classes, com- provide details of other central banks around the rise in yields. But most dis- cord Genuity Wealth Man- Alan Higgins: concern over respectively. these are a function of the mercial property has not asset classes in portfolios. world engage in “financial miss the comparison, not- agement. “Despite four government bonds “We still see a place for desire of investors to buy Of the 29 firms who did so, 11 specifically men- The alternatives are tioned infrastructure-re- unappetising for lated products. These pro- Investment allocation vide a degree of inflation Current asset allocation of the average balanced portfolio invested on behalf of UK private clients Current asset allocation of the average capital growth portfolio invested on behalf of UK private clients (%) those who think protection, since their reve- (%) nues are often linked to Organisation Cash Equities Bonds: Bonds: Property Private Hedge Commods Other Cash Equities Bonds: Bonds: Property Private Hedge Commods Other inflation may Corporate Government Equity Funds Corporate Government Equity Funds retail price inflation, and Adam & Company 2 78 5 7 3 5 2 95 3 become a problem reasonable yields. But big quoted infrastructure trusts Arbuthnot Latham & Co., Limited 1 70 9 15.5 4.5 1 82 12.5 4.5 tend to trade at premiums Ashcourt Rowan 2 60 15 4 3 2 10 4 2 73.5 5 2.5 13 4 to net asset value, reflecting Berry Asset Management PLC 160 125 616 97 3 enjoyed such a dramatic their popularity. Brooks Macdonald Asset Management 10 38 28 6 8 3 7 7 58 17 4 6 3 5 rebound, especially outside Equities may have looked Brown Shipley 5 58 4 5 4 11 3 10 5 80 5 7 3 the capital. The IPD UK All a strong bet for the first few C. Hoare & Co. 1 58 14.6 6.5 5.1 7.4 3.1 4.3 1.3 94 1.9 2.8 property index is up 2.8 per months of 2013, but the Canaccord Genuity Wealth Management 2.9 66.7 8 11.9 4.3 4.3 1.9 2.6 77.7 8.6 5 4.1 2 cent over the year to April recent pullback has served Cazenove Capital Management 7.5 45.5 20 10 12 5 8 65.5 10 5 7.5 4 30, with the best-performing to remind investors of their Charles Stanley Group PLC 5.6 83.4 3.7 5.3 2 sub-sector – offices – up by chief drawback: volatility. Citi International Personal Bank, UK 45 25 22 8 59 20 11 10 4.7 per cent. That’s far less Shares don’t offer cast-iron City Asset Management Plc 2 61.5 15.5 4 17 2 83 7 8 than the 16.6 per cent gains protection against inflation, Coutts 1.5 50.5 10 12 5 9 5 7 1 73.5 2.5 2 8 4 9 posted by equities over the but the tendency for divi- Dart Capital 2.5 53 21.2 9.5 5 8.8 3.5 78 9.5 3.5 2.5 3 same timeframe, or the 6.1 dends to rise in line with Duncan Lawrie Private Banking 62 22 3 3 5 5 76 14 7 3 per cent gain for bonds. inflation or even outpace Equilibrium Asset Management 7 55 25 5 8 5 80 10 2 3 “We are presently debat- it is useful for portfolio GHC Capital Markets Limited 65 20 5 10 65 20 5 10 ing the merits of adding managers. Hills points out Greystone Financial Services 27617 52 94 4 to our commercial property that dividends in the UK Heartwood Investment Management 8.4 58.7 8.1 11.6 8.7 4.5 5 81.6 4.9 8.5 exposure for the first time have grown by 65 per cent Ingenious Asset Management 1 51.5 7 24.1 5 2.6 8.8 0.9 67.1 3 12.6 5 2.6 8.8 in many years,” says Hills since the peak in share Investec Wealth & Investment 3 68 8 10.5 2.5 4 4 75 4.5 8 2.5 6 4 at Investec Wealth. “We prices at the end of 1999, Investment Quorum Ltd 265 8252 83 105 believe the concerns about and market forecasts are for J.P. Morgan Private Bank 6 35 5 6 3 5 21 3 16 2 55 0 3 4 8 18 5 5 Jupiter Asset Management 2.6 72.9 19.6 4.9 1.5 87.3 6.9 4.3 Killik & Co 75 14 3 5 3 85 3 3 3 3 3 Doubts about gold Kleinwort Benson 11 46 10 11 3 2 10 7 5 80 6 7 2 Lombard Odier & Cie. 11.5 35 15 15 8 6.5 9 One asset class that does cliff’ and a eurozone break- London & Capital Asset Management Ltd 35 50 10 5 30 50 10 10 not seem to have made up – have been managed,” McInroy & Wood Ltd 75 25 75 25 much ground in portfolios, says Robert Farago at NW Brown despite growing doubts Schroders. Psigma Investment Management 7.5 47.5 17.5 5 7.5 15 2.5 62.5 12.5 10 12.5 about bonds, is gold, writes There is also the issue of Quilter Cheviot 3 74.5 15 5 2.5 2.5 87.5 2.5 7.5 Jonathan Eley. Of the 47 price. Gold rose from below Rathbone Investment Management 70 2 10 2 2 2 12 84 5 3 2 6 wealth management firms $300 an ounce at the start RBC Wealth Management 2.4 35.2 10.4 16 3.2 10.4 2.4 20 2.6 45 6.8 9.3 3.4 12.8 5.1 15 surveyed, none had more of the noughties to a peak Redmayne-Bentley 28315 than 10 per cent exposure of $1,800 an ounce in 2011, Rothschild 9.8 55.1 15.5 1 2.5 11.9 4.1 0.1 8.7 66 5 1.3 2.9 12.7 3.3 0.1 to commodities in general, but this year has seen a Ruffer LLP 448 27 1614 while only one mentioned correction. Saunderson House Limited 362151010 758 6 11 gold by name when invited “We think the equilibrium Schroders Private Banking 2.8 46.5 8.4 12.3 5.3 14.8 4.1 5.8 1.6 67.8 1 5.4 4.2 14.3 2.8 2.9 to provide details of “other value of gold is around Seven Investment Management 2 49.1 16 18.1 4 1.5 4.8 4.5 2 70.5 5.2 9.6 3 2.9 4.1 2.7 assets” held. $800 an ounce, so at SGPB Hambros 2 50 17.5 8.5 5 4 13 4.5 81.5 5 7 2 “There is a strategic case current prices you’re still for gold, in the sense that paying a big premium for Smith & Williamson 3738 9 72 815 5 7 governments in the west insurance,” says Farago, Thurleigh Investment Managers 2 51 37 10 2 51 37 10 are heavily in debt and are who adds that Schroders’ Towry 0.2 56 4.5 4.1 8.9 1.9 24.4 0.1 63.2 2.3 2.2 6.5 1.9 23.8 unlikely to be able to grow own allocations to the UBS 5.78 52.22 18.3 23.7 5.19 71.47 10.17 13.17 out of it. And gold is a yellow metal have varied Vestra Wealth 57 21 7 2 9 4 78 11 8 3 good hedge against from 5 per cent to 10 per Walker Crips 1.4 51.2 15 10 5 5 7.4 5 0.5 90 2 2 3.5 2 monetary instability. But cent. “To own more than from a tactical perspective, that you’d have to have a Average 3.9 57.9 15.1 11.5 4.6 2.6 8.7 4.6 9.1 3.0 74.4 10.2 7.9 4.4 3.9 7.9 4.4 6.0 the big risks we faced last very different view about Max 11.5 83.4 50 27 10 5 21 10 25 8.7 97 50 25 11 8 18 10 23.8 year – things like the ‘fiscal where things are heading.” Min 0.2 35 2 3 1 1.5 1 1.9 0.1 0.1 30 0 2.2 1.3 2.5 1.9 1.9 0.1 8 FINANCIAL TIMES SATURDAY JUNE 15 2013 FINANCIAL TIMES SATURDAY JUNE 15 2013 9 Money guide: Private client wealth management Investors increasingly look to alternatives

cent today. Société Géné- Diversifying rale Private Bank also increased its holdings in Art, wine, property alternatives, from 6 per cent last year to 13 per cent, and infrastructure boosted by growth in infra- funds are growing in structure holdings. “Investors have turned to popularity, says Lucy alternatives as the trading Warwick­Ching environment has made achieving diversification with traditional invest- ments much harder,” says Wealth management com- George King, head of portfo- panies have increased their lio strategy at RBC Wealth holdings in alternative Management. “This has investments as a way of resulted in large part from diversifying client portfo- monetary and policy inter- lios in ever more challeng- vention.” ing markets. Tom Becket, chief invest- Managers say alternative ment officer at Psigma investing – including col- Investment Management, lectables such as stamps, says Psigma has a maxi- coins, art, wine and classic mum weighting in alterna- cars – has grown popular as tives across their invest- returns from equities have ment strategies to ensure it stalled and concerns have can protect client portfolios. grown about the world “Alternatives have become financial system. extremely important in In times of economic modern asset allocation and uncertainty there is often provide investors with the increased demand for such ability to reduce risk and rare physical assets. maximise the opportunities The Towers Watson Glo- in global financial mar- From fine art to classic cars, infrastructure and vintage wine, alternatives are gaining traction Bloomberg, Getty bal Alternatives Survey kets,” he says. 2012, which analyses the Coutts, the private bank, alternative investment mar- has also seen a significant Wealth & Investment, says: property or in company and the seller of the asset.” and what they hope to gain ket, shows total assets increase in wealthy individ- “Infrastructure funds are shares, while real estate Other wealth managers – before committing to any under management among uals seeking alternative providing a welcome source investment trusts (Reits) like hedge funds as a diver- product that invests in non- the companies it tracks at assets, such as art, as part of income for investors and also allow investment sifier for client portfolios. mainstream assets. $3.87tn. The largest invest- of their portfolios. “A few we expect the sector to con- into direct or indirect Iain Tait, partner at private “While the lure of alterna- ment managers control years ago clients just tinue to perform solidly holdings. investment office London & tive investments can be more than £3tn of those wanted equities and bonds over 2013.” But demand for property Capital, says: “Hedge funds strong, they are very often assets. Much of this total is but they now want a wide Investec has increased cli- is changing with some and private equity can be a promoted with the promise made up of real estate, pri- distribution of assets,” says ents’ exposure to infrastruc- wealth managers reporting very useful tool when diver- of high returns, but in vate equity, hedge funds, Alan Higgins, chief invest- ture funds by £40m over the a rise in clients wanting to sifying a portfolio. times of difficulties, real infrastructure and commod- ment officer at Coutts. past 12 months and is one own property directly. “Typically, these funds issues arise for investors,” ities, but it also includes Another growth area for of the largest shareholders Mohammad Syed, head of are used for downside pro- warns Lee Robertson, at more esoteric assets. wealth management compa- in four of the largest pub- strategic solutions at tection, rather than to financial advice group This year’s FT survey of nies is infrastructure. Here, licly quoted vehicles – GCP Coutts, says: “Over the past enhance returns, which fur- Investment Quorum. wealth managers also sup- the success or failure of a Infrastructure, Interna- year, one growth area has ther de-correlates them “These can include ‘gating’, ports this. In its balanced fund relies heavily on gov- tional Public Partnerships, been in direct investment from the wider markets.” or the locking in of invested portfolios, Towry increased ernment spending, but the John Laing Infrastructure opportunities. For those cli- But not everyone is keen capital, illiquidity, dramati- holdings in alternatives – sector is largely seen to be and HICL Infrastructure. ents interested in clubbing on alternative assets. Some cally falling underlying which included unregulated stable and have a lower risk Another popular asset together and buying a prop- experts warn would-be capital values and issues collective investment than traditional equities. class is property. It is possi- erty we will often source investors to look very raised by lots of investors schemes (Ucis) – from 22.9 Chris Hills, chief invest- ble to buy into open-ended that property and act as a carefully at where the rushing for the doors when per cent last year to 24.4 per ment officer at Investec funds that invest in direct bridge between the client returns are coming from – they anticipate problems.” 10 FINANCIAL TIMES SATURDAY JUNE 15 2013 FINANCIAL TIMES SATURDAY JUNE 15 2013 11 Money guide: Private client wealth management Money guide: Private client wealth management

IC/FT Wealth Management Awards plans. Charles Stanley, which boasts an experi- enced inheritance tax team, Award Winner Who’s best at won the award for inherit- Inf lation and eurozone top list of worries Wealth manager of the year BestInvest ance tax and succession Best wealth manager for investments Bestinvest planning. The final tax Best wealth manager for alternative investments Killik & Co award went to Rothschilds Kevin Gardiner, chief Killik’s head of research. inflation will remain above the US is, if anything, even fixed assets. As emerging for exemplary skills in the Outlook investment officer for Perhaps unsurprisingly 2 per cent for much of the more subdued. markets expert Jim O’Neill minding Best wealth manager for tax efficient investments St. James’s Place Wealth Management area of trusts. These are not Europe at Barclays Wealth, for an industry mandated to next two years, but fall China is another potential recently told an FT Money Best wealth manager for tax advice Chantrey Vellacott DFK as straightforward as they There is plenty to is more relaxed, saying that preserve wealth, inflation is towards that level subse- source of trouble. Recent investor round table, that’s Best wealth manager for inheritance tax and succession planning Charles Stanley & Co once were when it comes to keep wealth the average US consumer is also a major concern – quently. The “fan charts” in economic data from Beijing good news for consumer Best wealth manager for trusts Rothschild Wealth Management withstanding tax assaults in better financial health although the threat from their latest Inflation Report has suggested that the brands such as Nestlé and your money? and getting them right from managers awake at than commonly believed. rising prices seems more ascribe a 60 per cent proba- economy is shifting to a Samsung, but less positive Best balanced wealth manager Aberdeen Asset Management the outset is crucial. “We doubt QE will be hypothetical than real at bility of inflation lying lower rate of growth for big mining groups – Best growth wealth manager McInroy & Wood Four awards are based night, warns ‘tapered’ imminently, and the moment. The Bank of between around 0.8 per cent driven more by internal which constitute a big have achieved them. Spill- Best cautious wealth manager Matterley solely on performance data Jonathan Eley interest rate rises are still England’s economists and 3.2 per cent for much of consumer demand than chunk of the FTSE 100 Awards ing the beans leaves them Best income wealth manager Rathbone Unit Trust Management Limited and an assessment of man- on the far side of the fore- believe consumer price 2015 and 2016. Inflation in exports and investment in index. open to the risk they could agement strategy by Asset cast horizon,” he adds in Rosie Carr reveals look worse than useless or, Best wealth manager for charities Royal London Asset Management Risk Consultants. Aber- the latest edition of the in the opposite direction, Best UK private bank SGPB Hambros deen, McInroy & Wood, On May 22, Federal Reserve bank’s client newsletter. the winners in the that success could trigger Best global private bank HSBC Matterley and Rathbone all chairman Ben Bernanke That may be why the end IC/FT Wealth copycat strategies. But this won following inspections told a congressional com- of unorthodox monetary veil of secrecy over the Source: FT/Investors Chronicle of their efforts to achieve mittee that if labour market policy is not top of the list Management Awards industry makes choosing a the optimum results for data showed signs of con- of what worries wealth wealth manager a rather trustworthiness, range of wealth manager for invest- and it operates a branch their clients through active sistent improvement, the managers. In our survey, tricky business, where word solutions, competence, com- ments. Bestinvest clients network, so clients can portfolio management. Fed might scale back its 20 companies said it was a Wealth management is a of mouth recommendations munication and the costs or rate it highly for perform- have face-to-face discus- One final area of the purchases of mortgage concern. But 27 said further tricky industry to judge. are heavily relied upon. the fees paid. ance, customer service, cost sions with brokers. awards deserves a mention. bonds and US government trouble in the eurozone was There is lots of secrecy on The IC/FT Wealth Man- The survey appeared in and competence. Customer Four award categories Our two private banking bonds, currently running at a major concern, more than all sides. Few of us are agement Awards are a sort FT Money and we used satisfaction is a factor in its relate to tax efficiency mat- awards pay homage to pro- 85 per cent. for any other risk factor. inclined to reveal how of giant word of mouth readers’ votes, with analy- growth – in the three dec- ters. St James Place was viders who allow us to Over the next few days, Economic conditions in much we earn, let alone exercise. For the past six sis by a panel of judges, and ades since it was founded, recognised as offering excel- access our money however, the S&P 500 index fell 7 per the eurozone remain unde- how much we invest, where years we have asked read- number crunching by Asset Bestinvest has become a lent solutions, while wherever and whenever we cent, and other markets fell niably challenging, with we stash that money and ers, via surveys in both Risk Consultants, to decide source of advice for more Chantrey Vellacott, one of want it, while keeping it by more; Japan’s Nikkei 225 even the continent’s strong- what returns we make. publications and online, to the winners. than 50,000 clients. Voters the oldest firms of char- secure and safe, and if pos- dropped by that much in a est economies showing On the other side, the say who they use for vari- Bestinvest, which caters also scored stockbroker Kil- tered accountants in the UK sible, earning a return. The single day. It served as a signs of a slowdown, and wealth managers who look ous services – such as for investors who want to lik & Co highly for all- and a tax advice specialist, voters and panel agreed: preview of what a market unemployment at historic after our money can be just investment and tax advice, manage their own money round excellence in our was rated top for its efforts both SGPB Hambros and not supported by central highs. Many also think that as tight-lipped when it will writing, setting up and those seeking advice alternative investments cat- to provide tax solutions HSBC do a superb job. bank money creation might eurozone banks may need comes to discussing the trusts – and then to rate and an expert pair of hands, egory. Its focus is on brok- which take account of the look like. to make further capital gains (if any) they have them by giving scores for was voted best wealth man- ing services, alongside full individual’s personal cir- Rosie Carr is deputy editor Dan Morris, a strategist delivered and how they financial performance, ager of 2013, and best discretionary management, cumstances and future of Investors Chronicle at JPMorgan, thinks the US stock index could fall by ‘The QE gravy train about 10 per cent once has reached its quantitative easing ends, based on falls of 13 per cent destination, and after the first bout of quan- markets should price tative easing ended and 14 per cent after the second in a risk premium’ bout, which finished in summer 2011. “But there are enough other factors supporting equity markets calls, while the future of to believe that any European monetary union retrenchment will be fol- is also still undecided – lowed by renewed, albeit and may come into slower, price appreciation.” sharper focus after the Ger- Chris Wyllie, chief invest- man federal election in ment officer at family September. office Iveagh, thinks the However, strategists at testimony should shake Killik & Co think this infor- some complacency out of mation is already factored markets. “The QE gravy into investors’ positioning train has pretty much and decision-making. “Sus- reached its destination, and tained indications of the markets should price in a slowing of post-financial cri- risk premium for a little sis deleveraging, credit more uncertainty. growth turning positive and “My hunch is that this a bottoming of the inven- is exactly what Ben Bern- tory cycle, could have a anke was seeking to large impact on valua- impart, in his Delphic way.” tions,” says Mick Gilligan,

QE threat: Fed chairman Ben Bernanke AP 12 FINANCIAL TIMES SATURDAY JUNE 15 2013 FINANCIAL TIMES SATURDAY JUNE 15 2013 13 Money guide: Private client wealth management Money guide: Private client wealth management

Services RDR – more of a whimper than a bang?

ence in the advice they compliance is too expen- advice is packaged has Many in the wealth man- that they clearly under- Regulation receive since the new sive. Others have raised become more transparent in agement sector bristle at stand exactly what the term regime started on the last their minimum investment the wake of RDR, not much the inference that they ‘restricted’ means,” says Despite all the hype, day of 2012. levels for clients, in order to else has changed. were providing inferior Tom Street, executive direc- Some also seem unaware balance their books now The cost of advice advice before the new rules, tor at Investec Wealth & most clients have that the way they pay for that they can no longer remains comparable and but others are questioning Investment. noticed little change, advice has changed. accept commissions from those providers that have whether the review has “Clients come to us for a In fact, the rules, her- product providers. always been focused on gone far enough. specialist investment man- reports Elaine Moore alded as the biggest shake- Matthew Parden, manag- unbiased and transparent In addition to making fees agement service which is

cation up of financial services ing director at Duncan advice will have been explicit and setting new exactly what they receive. since the “big bang” dereg- Lawrie Private Bank, says broadly unaffected, he minimum exam require- In this respect we have seen ces As the deadline for the ulation of the City in 1986, that although the way that adds. ments, RDR has introduced no disruption or loss of cli- retail distribution review have put an end to covert a new way of classifying ents due to RDR and they Organisation UK offi UK advisers Joined in 2012 Clients £m AUM Advisory £m AUM Discretionary used Products/services RDR classifi Hourly rate? Management Investment Discretionary Management Investment Advisory Brokerage Equity Private Funds) of (including Fund Funds Hedge Commodities Planning Tax Planning & Estate Trust Planning & Retirement Pensions Planning Philanthropic Insurance Banking Mortgages Other lending services Charity services Offshore Concierge (RDR) loomed at the end of fees and charges and intro- Few know how much they pay advisers as either “inde- have told us they are com- Adam & Company 5 16 0 1,500 1,300 Entire market Restricted NoX XXXXXXXXXXX last year there were plenty duced a new standard of pendent” or “restricted”, fortable with the term of gloomy industry predic- professionalism in the depending on the extent of ‘restricted’.” Arbuthnot Latham & Co 2 28 7 3,750 250 385 Entire market Independent YesXXXXXXXXX XXX XX tions about the impact the industry. More than one in 10 year, in spite of the fact their advice. However, Paul Taylor, Ashcourt Rowan 13 81 6 50,500 191 1,592 Entire market Independent YesXX XXXXXX XX new rules would have. Linda Woodall of former wealthy investors have no that this is the way that Before the review, the founder and managing Changing the way con- regulator, the Financial idea how they pay for most investors would like to regulator expected most director of McCarthy Tay- 1 6 0 684 1 671 No X XX Berry Asset Management Entire market Restricted sumers receive and pay for Services Authority, said at financial advice and many pay for advice. advisers to remain inde- lor, thinks the wealth man- Brooks Macdonald Asset Management 9 76 4 11,500 4,273 357 Entire market Restricted NoXXX XX financial advice would the time of its introduction more assume that they are Instead, close to 20 per pendent and work to meet agement industry and regu- leave a million “orphaned” that RDR would make con- paying nothing for the cent of those asked paid a the necessary requirements lator need to rethink the Brown Shipley 5 49 5 11,000 314 2,342 Entire market Restricted NoXX XX XX X XX clients no longer able to sumers “more confident advice they receive, fixed annual charge to their to advise across the whole terms, as “restricted” C. Hoare & Co. 2 14 1 1,400 - 1,130 Entire market Independent YesX XXXX X XXX afford professional help as about getting advice”, according to new research, adviser, and more than a market. However, in the remains too broad. well as hundreds of inde- ensuring that investors writes Elaine Moore. quarter paid a fee based on FT’s 2013 survey, just nine “Making a clear distinc- Canaccord Genuity Wealth Management 4 131 20 12,901 6,145 3,309 Entire market Restricted YesXXX XXXX XX pendent financial advisers understood exactly what A poll by Ledbury the amount they had organisations out of 47 call tion between advice and Cazenove Capital Management 5 69 0 c. 3,500 families 9,000 Entire market Independent NoX XXXXXX XX forced to retire or find a they were paying for and Research of 200 clients invested. There was a themselves “independent”. selling products, and ensur- Charles Stanley Group 33 550 25 75,000 5,220 5,730 Entire market Restricted NoXXX XX X new profession, according improving the overall who use a private bank or slight increase in the Restricted advisers say ing those that sell products to some analysts. standard of advice in the wealth manager and who number who pay an their status doesn’t concern are forced to be absolutely Citi International Personal Bank, UK 2 49 12 10,000 2,540 - Selected universe Restricted No XX X The reality has been far financial services industry. have more than £1m to hourly charge, but in clients and so meeting the clear about their status, City Asset Management 2 11 0 1,400 2 350 Entire market Restricted YesX XXXX less dramatic. Some organisations, nota- invest, also found that the total this accounts for just regulator’s definition of would be a huge benefit to In a survey of wealthy cli- bly high street banks, number who pay a fee 12 per cent of those independence makes no clients in their understand- Coutts 30 346 12 76,500 - - Selected universe Restricted YesXX XXXXXXXXXX XXX ents conducted for the FT, have opted out of advice based on the profits they questioned, up from 8 per sense. ing of the service they can Dart Capital 1 3 0 220 225 Entire market Restricted No X X most respondents say they entirely as a result of make has fallen in the past cent in 2012. “We have worked hard expect from their adviser,” have not noticed a differ- the change, deciding that with our clients to ensure he argues. Duncan Lawrie Private Banking 4 25 1 4,000 35 672 Entire market Restricted YesX XXX XXX Equilibrium Asset Management 3 4 0 520 10 220 Entire market Independent NoXX XXX GHC Capital Markets 2 5 0 2,741 37 307 Entire market Restricted NoXXX Greystone Financial Services 2 18 1 5,800 738 229 Entire market Independent NoXX XXX X XX Heartwood Investment Management 2 16 1 2,242 1,237 Entire market Restricted YesX XXXX X Ingenious Asset Management 1 9 1 1,500 - 1,001 Entire market Restricted No X X Investec Wealth & Investment 15 252 10 50,000 5,644 15,006 Entire market Restricted NoXX XX XX Investment Quorum 1 4 1 902 51 97 Entire market Independent YesXX XXX X X XX J.P. Morgan Private Bank 1 74 16 n/a n/a n/a Entire market Restricted NoXXXXXX X X XXXX Jupiter Asset Management 1 12 0 1,600 1,615 273 Entire market Restricted No X X Killik & Co 10 81 7 21,102 2,283 524 Entire market Restricted YesXXX XXXXXX XXXX Kleinwort Benson 6296 Entire market Restricted YesXX XXX XX XXXXX Lombard Odier & Cie. 1101 Entire market Restricted No X X London & Capital Asset Management 1 30 4 500 230 1,395 Entire market Restricted NoXX XX XX X McInroy & Wood 2 6 0 500 760 In-house only Restricted No X NW Brown 2 14 3 2,000 300 500 Entire market Independent YesXX XXX Psigma Investment Management 2 14 1 2,690 1,393 Entire market Restricted Yes X Quilter Cheviot 12 169 9 30,500 1,300 11,100 Entire market Restricted NoXXXXXX XX Rathbone Investment Management 14 217 18 31,936 1,086 16,098 Entire market Restricted No RBC Wealth Management 8 104 32 1,854 2,182 1,454 Entire market Restricted NoXX XXXXXXX XXXXX Redmayne-Bentley 38 97 4 50,000 571 591 Entire market Restricted NoXXX X Rothschild 1 35 3 1,188 880 3,540 Entire market Restricted NoXX XXXXX XXXXXXX Ruffer LLP 2 26 0 5,060 - 4,929 Entire market Other X Saunderson House Limited 1 29 0 1,332 2,772 - Entire market Independent Yes X XXXXX X Schroders Private Banking 1 23 0 836 185 3,152 Entire market Restricted No X X X X Seven Investment Management 2 21 4 3,800 1,247 1,585 Entire market Other No X X X X SGPB Hambros 8 80 3 5,821 - - Entire market Restricted NoXXXXXXXXX XXXXXX Smith & Williamson 6 177 13 15,500 3,256 9,767 Entire market Restricted NoXXXXXXXXXX X XXX Thurleigh Investment Managers 1 7 1 100 280 Entire market Restricted No X Towry 18 138 18 25,000 4,773 Entire market Restricted YesX XXX X UBS 7 222 22 Selected Universe Restricted NoXXXXXXXXXXXXXXXX Vestra Wealth 2 31 9 5,400 808 2,192 Entire market Restricted NoXXXXXXXXX XX Walker Crips 12 95 17 5,400 530 350 Entire market Both* YesXXXXXXXXX

Totals 44 32 15 14 18 19 23 29 29 12 9 15 11 11 30 24 4 % offering services 94 68 32 30 38 40 49 62 62 26 19 32 23 23 64 51 9

•depends on division used 14 FINANCIAL TIMES SATURDAY JUNE 15 2013 FINANCIAL TIMES SATURDAY JUNE 15 2013 15 Money guide: Private client wealth management Money guide: Private client wealth management

Clients, assets and fees How has the quality of financial advice changed Min. portfolio size £k Annual fee tariff (%) since RDR? Set fees win out over hourly rates Response

ent financial adviser, pri- the company. “The key it expects to refine and ”Bear in mind, there is Post-RDR vate bank, wealth man- question consumers should adapt its advice proposition no historical precedent or ager.” be asking is ‘what is the as it gets more feedback case study that wealth man- Better Unchanged 44% 49% Industry insiders Michael Morley, chief total cost of advice and from clients. agers can turn to to see executive of Coutts, is not investing?’, not ‘what is the Many wealth managers what might happen,” she say that their so sure. He thinks providers advice fee?’” entered 2013 with an open adds. “We are in a situation Organisation funds discretionary % of funds in in-house invested Advisory Discretionary £100k £250k £500k £1m £3m £5m (if applicable) Minimum fee information Additional charging models have come to market Perhaps it is still too mind about fees, reports where they literally have to 7% Adam & Company 2 250 1.25 1.25 1.25 1.13 0.88 0.73 £2,000 with different models and early to tell what the total Tillotson at Scorpio, which experience this change and I’d rather not say Arbuthnot Latham & Co., Limited 0 - 250 1.25 1.25 1.25 1.25 0.96 0.88 £3,000 Product trail commissions rebated to clients. No transaction charges levied. LSE membership limits have undergone a definitions of advice, which costs will be. Barclays is means there might be re- experiment with charging third party costs. can be confusing for clients. just one of the providers evaluations on the way as structures until the right seismic shift, says Source: Ledbury Research Ashcourt Rowan 0.3 150 150 1.5 1.5 1.38 1.88 0.89 0.84 £1,500 Discretionary service is charged on a tiered bases: 1.5% on fi rst £250k, 1.25% on assets £250k- Coutts charges an ongo- questioned which says that they assess the competition. formula emerges.” 500k, 1% on assets £500k-1m, 0.75% on assets thereafter. Plus administrative charges Elaine Moore ing advice fee, rather than Berry Asset Management PLC 0 250 250 1 1 1 1 0.75 0.57 £3,000 one-off charges, and insists that customers are happy Brooks Macdonald Asset Management 3 200 200 Available on application, but starting from 0.75% per annum + VAT depending on size and mandate. Dealing charges may apply. What is a fair fee for finan- with the system, so long as cial advice? Should the it is clearly explained. Brown Shipley 5.2 500 0.75 0.75 0.75 0.5 0.5 0.50 £1,500 per Dealing charge: £50 on the fi rst £500 of transactions 1.65% on the next £9,500, 0.50% thereafter sum depend on how long At London & Capital, annum you spend with a profes- another annual fee charger, C. Hoare & Co. 0 500 1.5 1.5 1.25 1 1 0.9 Reduced fees for charities, direct bond portfolios and larger portfolios. sional? Or on how much the firm explains its fees by Canaccord Genuity Wealth Management 3 250 250 0.75 0.75 0.75 0.58 0.55 £750 Plus transaction costs (0.85% for fi rst £10k, 0.4% thereafter). We also offer a fl at rate of 1.5% money you have? Or how telling clients that they are on fi rst £1m, 1% on next £2m and 0.6% thereafter, which also incurs a £40 dealing charge per good the advice is? buying investment strate- transaction. According to Matthew gies, not just individual Cazenove Capital Management 21 1,000 1 1 1 1 0.5 0.5 1% management fee on fi rst £1 million and 0.5% on excess over £1 million. Plus dealing com- Parden, managing director financial products. “Effec- mission: 1% on fi rst £30k of equities, 0.5% thereafter; 0.75% on fi rst £30k of bonds, 0.25% thereafter at Duncan Lawrie Private tive active investment man- Bank, providers subscribe agement requires continu- Charles Stanley Group PLC 1.5 - - to two main schools of ous review and monitor- Citi International Personal Bank, UK 0 65 - thought on fees: a set sum ing,” says Iain Tait, head of City Asset Management Plc 2.5 100 1 1 1 0.75 0.5 0.4-0.5 N/A Plus dealing commissions for advice or a pick and mix private clients. “Monitoring selection of fees that which can only realistically Coutts 0 3,000 250 depend on the sort of advice be provided on a flat fee Dart Capital 0 250 1 1 1 1 0.9 0.5 - 0.9 required. arrangement.” Duncan Lawrie Private Banking 0 250 1 1 1 1 1% on the fi rst £1m and £3m+ - 1% on the fi rst £1m and 0.5% thereafter Six months into the UK’s Clients expect to build a 0.5% thereafter new regime of transparent relationship over a number Equilibrium Asset Management 0 50 50 1.5 1.5 1.5 1 0.3 0.3 Includes fi nancial and tax planning as well as investment management pricing and it seems as of years, and so ongoing though the industry has advice is expected, with an GHC Capital Markets Limited 19 100 20 0.75 0.75 0.75 0.75 0.5 0.45 £375 Plus dealing commission of 0.75% per trade already chosen a winner. ongoing charge for it, says Greystone Financial Services 23 75 1,000 N/D N/D N/D N/D N/D N/D In the FT’s 2013 survey of Stuart Cummins, managing Heartwood Investment Management 52 500 N/A N/A 1.5 1.25 1.25% for fi rst £1M, 1% No additional charges except in certain circumstances portfolios will be subject to an initial advice wealth managers, only a director of Barclays Wealth for the next £2M and fee (£250+VAT if applicable) and an ongoing advice fee (£250 pa +VAT); full details available on handful of providers offered and Investment Manage- 0.75% thereafter request. to charge clients an hourly ment. Ingenious Asset Management 4 250 1.25 1.25 1.25 1.25 0.75 0.75 1.25% on the fi rst £1m, 0.75% on the next £9m, 0.5% thereafter; dealing charged at £25 per rate. Instead, most levied “Our bankers talked cli- trade set fees, linked to the ents through the industry Investec Wealth & Investment Minimal 100 100 1.25 1.25 1.25 1.25 £1,500 Sliding scale for £3m and £5m portfolios. £3m - 1.25% on fi rst £1m; 1% next £1m; 0.75% next amount invested. change and how it would £1m. £5m - 1.25% on fi rst £1m; 1% next £1m; 0.75% next £1m; 0.6% thereafter On the face of it, this may alter the way in which they Investment Quorum Ltd 0 100 100 1.25 1.25 1.25 1 1 0.75 This includes all switching and transfers. Also institutional or clean share classes used as often as not seem all that different pay for advice,” he says. possible. Any retrocessions from retail classes passed directly to client portfolios. to the annual charges that “During this education J.P. Morgan Private Bank n/a n/a n/a many investors previously process, some clients want paid in investment manage- detailed explanations of the Jupiter Asset Management 25 1,000 500 1.25 1 1% on the Negotiable Annual management fee on portfolios £1m and above is 1% on the fi rst £2m, 0.75% thereafter. fi rst £2m, External commissions and transaction charges passed on ment fees, part of which changes and take the oppor- 0.75% on were then passed on as tunity to review their plans the balance. commission for advisers. and approach to advice, Killik & Co 1 - 100 1 1 0.75 0.5 Fee negotiable above £3m, similarly for £5m and above But Catherine Tillotson, while others simply want managing partner of Scor- clarity about the impact on Kleinwort Benson 18 1,000 2,000 Sliding scale from 1.05% pio Partnership, says that them.” Lombard Odier & Cie. 15 1,000 1,000 0.9 0.9 0.9 $2k per quarter Third party charges at cost. the introduction of advice- St James’s Place, which is London & Capital Asset Management Ltd 43 500 1.25 1 0.85 0.75 based fees, and the ban on adamant that it has always commission, has led to a been transparent on the McInroy & Wood Ltd 80 10 1.2 1.2 1.2 1.2 1.2 Negotiable 0 All fees quoted are inclusive of VAT. seismic shift in the UK fees it charged to clients, NW Brown 0 50 250 1 1 1 1 0.75 Negotiable wealth management market points out that just because Psigma Investment Management 0.9 250 Annual management charge, fi rst £2m 1.25%, next £3m 1.00%, next £5m 0.75%, next £10m – even if it’s hard to see wealth managers need to 0.50% £20m+ by negotiation. Charges are subject to VAT. from the outside. agree their fees with clients Quilter Cheviot 0 200 200 Available on application “The removal of commis- does not mean that all sion means that clients can charges will be explicit. Rathbone Investment Management 2.3 100 100 0.7 0.7 0.3 0.25 0.25 0.25 £100 fi xed charge on all accounts, £20 transaction charge on each sale and purchase largely evaluate their “The challenge for con- RBC Wealth Management 5.9 2,000 400 £5,000 per Separate fee schedule may apply for bespoke and segregated accounts. Individual funds will bear charges on a like-for-like sumers is that many advis- annum additional costs. basis across business mod- ers talk about their own Redmayne-Bentley 0 50 50 0.85 0.85 0.85 £450 Plus dealing commissions and VAT els,” she says. “In turn, this fees in isolation and do not Rothschild 6 5,000 5,000 From 1% introduces direct com- include the annual manage- petition between different ment charge or the charges Ruffer LLP 42 250 kinds of provider: independ- made by a platform,” says Saunderson House Limited 0 500 - Not Applicable as discretionary services not offered Schroders Private Banking 18 1,000 1,000 1 0.85 0.75 First £2m: 1.00%; next £3m: 0.85%; next £5m: 0.75%; next £10m: 0.65%; thereafter: 0.50% Seven Investment Management 84 200 Fund charges of 0.9% plus fee tariff for discretionary services: On the fi rst £500,00 - 0.25% fee, on the next £500,00 - 0.1% fee, on the balance over £1million - Nil. And then Family accounts aggregated to produce most benefi cial pricing SGPB Hambros 3 500 500 1.5 1.5 1.5 1.5 1.25 1.00 £7,500 Wrapped fee provided. Clients can opt for either a wrapped fee (covering the cost of advice, dealing fees and custody fees) or an unwrapped version. Smith & Williamson 7 - - 1 1 1 1 0.83 0.70 Portfolio exc. Isa annual fee: fi rst £2m 1%, thereafter 0.5%. Commission rates: Fixed interest other than convertible and preference stocks 0.4%. All other investments 0.6% Thurleigh Investment Managers 100 500 1.25 1.25 1.15 1.00 Thurleigh absorbs the cost of custody, cash transactions and settlement out of their fee. Towry 100 100 2 1.83 1.49 1.2 0.9 0.84 Implementation charge of 1.5% + VAT for investments in portfolios sub-£250k; 1% implementation fee for portfolios +£250k UBS 10 1,000 500 Vestra Wealth 0 500 500 1 1 1 1 1 0.75 Walker Crips 5 50 20 0.8 0.8 0.8 0.8 0.8 0.80 These are the fees for the actively managed portfolio service. Other services fees will vary.

Financial advisers no longer claim commission Alamy 16 FINANCIAL TIMES SATURDAY JUNE 15 2013