You might initially find the term “boutique” wealth manager a little strange, since it is a word more readily associated with the worlds of luxury hotels and haute couture.
Yet boutique wealth managers are an option that should certainly be on your radar. Many wealth management clients favour the boutique model and there might be the perfect one out there for you.
How it works
Being a boutique in wealth management is about far more than a luxurious, exclusive feel, although this is a feature of some. Rather, it is about wealth managers which choose to focus on certain types of clients or investments they excel with; firms which prefer to stay small and perhaps privately-held – so that they have more freedom (as they would argue) to serve the best interests of their clients rather than shareholders.
Numerous boutique wealth managers have sprung up in recent years and this trend was accelerated by the upheaval in the industry stemming from the financial crisis. Many boutiques are spin-offs from larger investments houses, backed by private equity, and several have been founded by high-profile industry veterans striking out on their own after careers at leading wealth managers. But while prestigious names do hold a certain appeal, there are many other reasons a private client might choose a boutique wealth manager.
The first reason to select a boutique is that you have a real desire that your wealth manager’s product and service offering be tailored specifically for your needs, such as in completely bespoke investment portfolios. Customisation is always appealing, but you should remember that it invariably comes at a higher cost and that standardisation isn’t necessarily always an inferior option. The second, related, reason is that you have a very specific need (or desire) you want your wealth manager to meet. It could be that you have a special interest in sustainable investing; you might have complex cross-border needs; or you may be looking for a very traditional type of personal relationship. There are all manner of boutique wealth managers and private banks on offer in the UK. For example, there is even one which was founded to serve the banking needs of those working in the horse-racing industry.
The attractions (and drawbacks) of boutiques
Boutique wealth managers often offer their clients highly-specialised investment products which are not available to the mainstream market. They might also have a depth of investment expertise in a certain asset class or market which you might struggle to find elsewhere.
By virtue of their size, boutique wealth managers can tend to have closer, more durable relationships with their clients than the global brands. If a firm has only a few hundred clients then each individual one will naturally become quickly “known” across the organisation. Furthermore, some would say that because boutiques tend to have a lower degree of staff turnover there will be less chopping and changing when it comes to who advises you. A consistently high proportion of findaWEALTHMANAGER.com’s users are looking for a new wealth manager because their adviser has moved on, highlighting just how unsettling this can be. You should always ask a prospective wealth manager about their levels of adviser “churn” and what they do to ensure continuity.
There are many potential benefits to engaging a boutique wealth manager, but there are also possible drawbacks. Aside from costs perhaps being slightly higher, boutiques may lack the financial strength of the global banking brands and this might give you pause in still uncertain financial times. You might also need access to a broader range of services – or a broader geographical reach – than boutiques typically have on offer. There are various trade-offs to be made when deciding if a boutique or a larger investment house is most appropriate for your financial needs and personal tastes.
A final point to remember is that boutique versus big bank doesn’t have to be a binary choice at all. Many clients chose to have a primary wealth management relationship with a larger “one-stop” institution while giving a smaller proportion of their assets to a boutique to manage at the same time. While having multiple wealth management relationships is something some high net worth individuals wish to avoid, others are happy to cherry-pick the expertise and capabilities they need from among a number of wealth managers. We see both kinds of individual coming to findaWEALTHMANAGER.com to find and meet their best-matched providers.
If you haven’t considered using a wealth manager before – or if you haven’t reviewed your existing manager to check their competitiveness and suitability try our smart online tool. Or, if you would like to discuss your situation with our straight-talking team, please do get in touch here.