A law unto themselves
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Brian Tora
A generation or so ago, I was involved in the renaming of the private client investment boutique for which I worked. We came up with: "XYZ Financial Management". OK, I made up the XYZ bit, but financial managers was what we considered ourselves to be. This was based on the fact that we offered more than just portfolio management. Overall, financial planning advice was crucial, if investments were to be appropriately chosen.
In the late 1970s, this was radical stuff, but today it is commonplace. Except we call it wealth management now. I was reminded of this team of young City managers by the content of Westminster & City's Wealth Management conference last week. I was chairman of the event, for the second year. The way this industry has moved on in less than 12 months, let alone 27 years, is remarkable.
Representatives from Close Brothers, Kleinwort Benson, Skandia and Barclays Capital regaled an audience of wealth-management professionals on constant proportional portfolio insurance, liability-driven investment, Sipps and client segmentation. There were even lawyers to warn us about the perils of money-laundering and employing trust structures in view of changes in tax treatment.CPPI was a new concept for me. I found the prospect of locking in the value of a portfolio at a modest discount, with daily, upward-only reviews, most appealing. Barclays Capital's David Stuff explained how insuring a portfolio to guarantee that it could always be realised at 80 per cent of the highest valuation attained was catching on. The degree of sophistication in our market is truly amazing.Just as well, according to Kleinwort Benson's Martin Anderson, who pointed to various new clients placing traditional investment management way down their list of priorities. There is much evidence that the new breed of high-net-worth investor is more concerned with capital preservation, than capital appreciation. The latest World Wealth Report, produced by Cap Gemini and Merrill Lynch, suggested that wealthy investors were seeking broader strategies and advice - more emphasis on "wealth management" as opposed to the provision of investment solutions.The presence of two legal firms at the conference made you realise how much law and regulation is now part of wealth management. Even non-legal contributors, such as cstim's Jeremy Charles and Adrian Flambard from Close Private Bank, had to field questions relating to recent court rulings. Twenty-seven years ago, regulation barely registered on our radar screens. Then again, the collapse of Norton Warburg two years later triggered the investigation that was to lead to the first Financial Services Act, so I have little cause to hark back to those days as halcyon.A conference the previous day, at which I was guest speaker, also included a spot for lawyers. The audience was non-executive directors of investment trusts, and the topic was new company laws. My slot followed theirs. The message I felt obliged to convey was downbeat, as my role was to explain why private-client investment managers were only likely to be interested in buying specialised investment trusts in the future, rather than the more general trusts they had supported in the past. Yet the chance to appear as post-legal light relief seemed too good to be true.Imagine my surprise, when not only did the lawyers overrun but also, when I arrived at the auditorium to discover why there was a delay, my ears were assaulted with laughter. The firm of lawyers had first put their disclaimer at the start of their presentation and then professed to know little about legal aid. It is surprising what some people find amusing.If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
