Credo Wealth is proud of an investment process which shuns short-term fads and of taking a holistic view of its clients’ financial wellbeing. The result has been impressive organic growth.
Ian Scott, Head of Wealth Planning, outlines Arbuthnot Latham’s approach to wealth management and what he sees as the firm’s biggest strengths.
If we look at the history of the bank, we go back to the 1800s. Arbuthnot Latham is and always has been a private bank, in its various guises throughout its history. The development of both investment management and wealth planning – which together you might view as “wealth management” – is relatively new in the history of the bank, but this is now where we see ourselves being focused.
In terms of offices, we have Manchester in the North, which covers the northern part of the country, London covering the Southeast and then the Southwest regional office in Exeter. That actually gives us pretty comprehensive coverage of the UK. Then we’ve also got the Dubai office, which has just celebrated its first anniversary – this services expats in the main, but also some UAE residents.
Portfolios can be run on a traditional discretionary management basis or on an advisory basis if the client wants to be more involved. The vast majority of portfolios are run on a discretionary basis.
Our clients are very much entrepreneurs and professionals, if I had to identify two key areas. Many of the entrepreneurs are very hands-on people and once they’ve sold their business it’s quite likely that they want to be involved in the management of their portfolio. A lot of people in that segment would start off with an advisory portfolio until they wish to go up to full discretionary, once they’ve built that trust with us. Clients sometimes want to put a toe in the water, so they may say , “You can manage a portion of my money and once I’m comfortable with this I might go to full discretionary management”.
In some cases clients start off with an execution-only portfolio and then after a time they say, “Actually, I haven’t really got time for this”. Also, when people retire they have a lot more time and in some cases they then want to be involved. But often they find very quickly that actually they’ve got far less time than they thought they would and so they say, “I’d actually really like to meet that discretionary manager”.
The risk monitoring sits firmly in the hands of our investment managers and our head of investment management, St John Gardner has long had an association with Ibbotson in the States, who are deemed to be one of the best risk managers there are. The majority of our portfolios are designed to sit on the efficient frontier, which means for a given unit of risk we would expect to achieve a given unit of return. The asset allocation is driven by the risk-profiling process, which is both quantitative and qualitative.
We have an Ibbotson-based risk-profiling process, but we would always temper that with discussions with the client. That process will come out with a certain risk-profile for a certain pot of money, but just because someone has come out with a “Model 5”, for example, doesn’t mean everything has to be a Model 5 – that’s merely the starting point for the conversation.
From a wealth planning point of view, there is a “scoping” phase first of all. Wealth planning by its nature is very broad, so we actually cover nine different heads of planning, starting with the client’s lifestyle and what is important to them. Where there are children and grandchildren a lot of it is getting to understand that. I’ll often sit down with a client and ask them to draw a family tree to get a really deep understanding of the relationships. Quite often, one of the children might be in a difficult relationship with a partner and so protection of the family assets becomes important.
In summary, therefore, the first area we tend to focus on is lifestyle and what makes that client tick. Then it’s their views on money and what’s important about money to them. We’d then move through budgeting, liquidity, and debt management. These areas of planning are generally covered before we start talking about investment management. Our process is all about seeking first to understand and so naturally we’d also want to take into account the knowledge and experience of the client as far as investments are concerned. For example one client is the Chairman of a London-based investment trust. Clearly, his knowledge of investments is way above that of a novice.
One of the things we focus on is that our frontline wealth planners are chartered. We were the first private bank – and in fact the first bank – to be awarded corporate financial planner status by the Chartered Institute of Insurance back in 2011. We place a great emphasis on qualifications and therefore all of our front-line advisers are Level 6 qualified [QCF Level 4 became the minimum qualification standard for advisers under the Retail Distribution Review reforms]. Arbuthnot Latham is keen, as am I, in my position as head of wealth planning, to make sure that our advisers are highly qualified.
I would also say that we stand for traditional values, but we’re also very forward thinking and entrepreneurial. We aren’t old fashioned, but we have traditional values. We have many clients come to us from other wealth managers, telling us that their previous wealth manager has lost the personal touch.
Lastly, if clients want to get an extremely thorough review of what they’ve got and to understand where they are before they start embarking on an investment programme then we are very strong at doing that. We want people to understand what they’ve got first and foremost rather than trying to force them down any particular route.