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IFA signs up 40 firms and £235m of assets for fund rating tool

by Jun Merrett on Feb 15, 2013 at 10:19

IFA signs up 40 firms and £235m of assets for fund rating tool

Chester-based IFA Colum Wilde has signed up 40 advice firms and £235 million of assets to his fund rating tool Clever Adviser.

The tool, which is available on all wraps and platforms, scores funds on a range of criteria, alerts advisers to underperformance and acts as a prompt to email clients a ‘buy’ or ‘sell’ recommendation.

‘I wanted to make an early warning system,’ said Wilde. ‘No-one ever tells you when to turn around and sell a fund, and to run the winners and cut the losers.’

The software, which was developed over 10 years, assesses funds’ Sharpe ratio, alpha, average six-month performance, average 36-month relative performance, relative volatility, research rating, relative maximum loss and beta.

Wilde, who is Chester office director for Helm Godfrey, said he is aiming to have £16 billion assets on the system by 2016.

Clever Adviser charges a 0.15% registration fee and 0.15% per annum.

Click here for our definitive database on wraps.

19 comments so far. Why not have your say?

Tarqs1

Feb 15, 2013 at 11:14

"said Wilde. ‘No-one ever tells you when to turn around and sell a fund, and to run the winners and cut the losers"

Ermmmm.... really?

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What a load of tosh

Feb 15, 2013 at 12:55

I hope these 40 firms all have discretionary permission to switch funds, or do they write out to each client each every time a switch is required?

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Smartone ha

Feb 15, 2013 at 13:40

Running with the winners and cutting the losers is so subjective. Last years winner is likely to become next years loser and visa versa, therefore isn't it better to cut the winner and hang onto the loser until it comes good (Scottish Widows funds excluded!!)

I am not referring to the obvious dogs that have been dogs for years and should never have been recommended in the first place.

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Julian D

Feb 15, 2013 at 13:57

Apt title, Clever Adviser...he obviously is one as 0.15% of £235m equals £352,500 upfront and the same again each year. Winner!

Well done Colum - Not so sure about the IFAs running to use his services though...

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Iain Mackie

Feb 15, 2013 at 14:11

We run our own set of 10 Model Portfolios using the Clever Adviser system and monitor their performance against around 100 DFM Models. The results over the last three years speak for themselves and we now have over a third of our Funds under Management with CA. 8 of our 10 Portfolios are in the Top 16 since January 2010 so the extra 0.25% we charge clients for using this service is not an issue.

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The Other Side

Feb 15, 2013 at 14:16

Fund Management with a consistent 'long term view'

What ever happened to that......?

Agree with Smartone Ha, a bad dip in form due to one underlying stock doesn't always mean its best to drop that fund, and any advisr worth their salt will generally have avoided consistently poor performers.

Sounds like another outsource for outsourcing sake.

Just what are some advisers charging that 0.5-1% trail for......

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Mike C3

Feb 15, 2013 at 14:52

@What a load of tosh (Sounds like an appropriate pseudonym ! ). You don't seem to have read the article properly ( Occupational hazard ? ). It clearly says that the system is a prompt for a switch ( out of an under-performing fund into an alternative which currently beats the threshold ).

Certainly, if you have DFM authority it makes life easier as you can then cut out the client from the regular monitoring process.

However, my experience is that clients a) like the reassurance of the monthly contact that someone ( or something ) is actively watching over their investments - it is usually a new phenomenon for them if they have been used to the infrequent contacts from an IFA - and b) feel they are actually having value added to their affairs for the CAR of 1% ! ""

@ Julian D. 0.15% of £16bn sounds even nicer !! And, if you know Colum, then you know he will achieve it !

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Aunty Tacky

Feb 15, 2013 at 21:50

"No one ever tells you" shock horror!! - are IFAs not supposed to have sufficient knowledge, awareness and expertise to provide on-going quality advice to their clients. That is how the advice fees are justified - or is someone admitting something here.

Clearly not in the 40 firms who have signed up to this "get us off the hook when it all goes horribly wrong" system. Is this any different to what a good adviser or DFM should be doing anyway.

I'm not entirely surprised that organisations like SJP are cleaning up at present - with their research, monitor, review and replace structure tried and tested - and with no extra charge for the privilege.

It would be very interesting to see the real TER comparisons when the initial and ongoing adviser fees are added to the DFM charge, the underlying charges and now this oh so Clever Adviser system.

Good luck to Colum - some of his adviser fraternity are obviously sadly lacking the most basic elements of what an adviser should have.

I like the Mr Mackie stance - brazenly welding on an extra 0.10% on top of the 0.15% charged by the Clever Adviser, but maybe there is no other charge to those clients, or maybe there is! Their TERs over 10 years will be revealing in the long run.

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Dathan Steele

Feb 16, 2013 at 08:50

This is a very worrying piece of software. I saw a beta version of it years ago. It simply does not work, from various angles:

(1) It does not factor in the costs of all the constant switching

(2) Constantly selling funds as if they were individual shares might well have GCT implications for clients, if the funds are not held in a SIPP/ISA or other tax wrapper.

(3) The whole point of buying a particular fund is that either it tracks a particular index cheaply, or that we are buying the skills and outlook of an individual fund manager. If, for example, Woodford is not liking the way the market is going, then he will not take part, and will therefore under perform compared to his peers. CA would have you sell the fund, and maybe rebuy it at another time. But this is simply not the way an adviser should be picking funds. Long term performance is key.....we are not day trading!

(4) Additional costs. Why pay additional bps on top of already historically high ters? This will just act as a brake on overall portfolio performance, more so when looking at lower risk portfolios where there are simply not enough performance bps to pay all the vultures picking at the carcass. As there is a lot more work here for the advisory firm then maybe 50 bps ongoing charge won't cut it, so they will have to charge clients more....

Better to use either an outsourced fund list (OBSR, RSM etc), or use Model Portfolios by a DFM or similar.....or indeed use FoF or MoM......

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William Storrow

Feb 16, 2013 at 11:21

What total nonsense. You could acquire DFM services to make those decisions for you at around 25 basis points, and have them undertake those changes as well for a total of 40 basis points. Why would you pay for a subjective system at 15bps and then have to undertake those changes yourself with full responsibility for the decisions. Perhaps Colum should build a system to predict which footballers should be transferred from your fantasy teams, I am sure there are plenty of wannabe Alex Ferguson's who would be delighted to waste their money.

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Luxemburg3r

Feb 18, 2013 at 09:55

It is interesting to see how some advisers are quick to rubbish someone (or his programme) who presents a potentially interesting option for so-called professional advisers. One would have thought, if the programme works and advisers can rely on it for the benefit of their clients, it potentially offers a low-cost solution for fund selection and monitoring.

Plenty of hedgies write algorithms to monitor various market constituents and charge 2% + 20%, so 0.15% seems an absolute steal. If it works.

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Jason Betteridge

Feb 18, 2013 at 10:13

My experience of Clever Adviser which is very good to date seems to be that IFAs that use Clever, love it and those who don't, hate it. Therefore "marmite" springs to mind but that is not the view of clients.

Clients really like the idea that there funds are being monitored on a monthly basis together with contact from their IFA monthly to update them. They also like the control of agreeing any switches should there be any. By the way, what about the months when no switches are required.... Clients like to know that there funds are above criteria and in turn get emailed to confirm that no switches are required.

Switching costs are not an issue when you use platforms with funds at NAV! The TER tends to be around 2% and I haven't had a client yet that doesn't value this service and its ongoing cost!!

Performance can only be based on past experience and I look forward to seeing how this compares in the future having only placed clients into Clever Adviser since May 12. Perhaps the doubters should contact Clever who can clearly demonstrate a track record of circa 14 years against most indices especially APCIMS which is the benchmark used by a number of DFM's.

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Ian Kemp

Feb 18, 2013 at 10:39

18 months ago I was happy we had developed a service for clients based on their values and what they wanted their money to do for them. I was also reasonably sure we covered risk in a way which clients could understand. The problem was how to translate this into a consistent investment strategy which they could appreciate and also manage the risk to our company.

I looked at fund of funds, passives, DFMs etc, and whist each offered benefits they also seemed to me not to provide the full solution - a view the FSA seem to share. Other people have grappled with the same problem and come up with a different solution based on their clients requirements.

But for me, Clever Adviser was the missing piece of the puzzle.

It has proved to be extremely popular with our clients - existing and new - and strengthened relationships. It is simple to explain, and they really appreciate our ability to actively review their investments on a monthly basis.

Not having to worry about fund selection also leaves more time to concentrate on the areas where we can really add value - helping people live the lives they want.

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William Storrow

Feb 18, 2013 at 11:43

This is an entirely quants based system with sell recommendations based on quants. There is no qualitative overlay, meaning that an adviser either assumes that quants are all that matters (flawed), or undertakes the qualitative aspect themselves, which leaves them in virtually the same situation that they started with. This is a case of the blind leading the blind I am afraid, point me to an investment professional at Clever Adviser...

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Ian Little

Feb 18, 2013 at 12:51

We have identified three main beneficiaries of the CleverAdviser service:

Firstly – Clients. They really love the service and it gives them confidence and reassurance through regular contact with us.

Secondly – Compliance .It introduces a visible, repeatable and traceable process for every client, every month.

Thirdly – Principals. Provides more time, more control, and better client contact every month.

In my experience, having met many IFAs over the years, the main characteristic that the most successful ones share is that they are process focussed. CleverAdviser clearly appeals to those firms.

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MikeR1973

Feb 18, 2013 at 13:16

Facts:

In our experience, the average time a fund has been held for is 22 months. The wrap providers we use do not have any initial cost to switch nor switch fees and they pre-fund, so our clients are ‘not out of the market’.

CleverAdviser helps take the ‘emotion’ out of the process – decision making in the investment sphere should be based on rational thoughts not a knee-jerk reaction as unfortunately demonstrated by some of the ‘negative’ comments listed earlier.

We don’t need discretionary permissions to deliver this service, and yes the process does involve us in writing (via email) each and every time a switch is required. It also emails them when a switch is not required and clients absolutely love this monthly contact.

All in all, CleverAdvsier has helped us deliver a robust visible, repeatable and profitable service which has reduced the stress for me as an adviser and improved the experience for our clients. Over the recent ‘credit crunch’ period, we have had no CleverAdviser clients issue even a murmur about the performance of their portfolios i.e. CleverAdvsier has clearly helped us to reduce the gap between ‘client expectation and investment reality’.

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Colum Wilde ( MD , Clever Adviser )

Feb 18, 2013 at 20:19

Unfortunately, the brevity of the article meant that many of the points regarding the CleverAdviser proposition have been misunderstood by some of the previous respondents. For clarity, therefore, please note:

Jason Betteridge is spot on when he states that for IFAs CleverAdviser is like Marmite – they either love it or hate it. However, as he also agrees, the important thing is that our experience clearly demonstrates that clients love it !

Clearly CleverAdviser is not going to be the main investment proposition for all IFAs nor, for those that chose it as such, for their entire client bank (‘shoehorning’ springs to mind). However, for those practitioners who believe it is important for them to be part of the investment process then CleverAdviser is a robust proposition. Following ten years in the making (including three million test runs over a four year period) the outcome has been the launch of a robust investment process. Additionally, c.£200,000 of specialist financial services legal fees have been incurred in order to prepare all the necessary documentation for this process. Accordingly, members from threesixty, Tenet, Sesame Bankhall and Simplybiz are amongst the CleverAdviser users.

Interestingly, when CleverAdviser has been demonstrated to accountants and solicitors, over 85% have stated that they found this process more understandable than any other investment process. Accountants like it because it is demonstrably and transparently mathematical and solicitors because in their opinion it clearly meets the spirit and the letter of the Trustee Act 2000.

I believe that every client should have a consistent experience which is well administered, well researched, and delivers clear outcomes which are transparent and easy to understand, and thus the final word has got to go to one of my own clients who said “the only time that I ever think about my investments now is when we meet for our annual forward planning meeting!”

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l'ifa passeport en provenance de France

Feb 19, 2013 at 14:59

£200,000 of specialist financial services legal fees .........to read the rule book ?

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James Hurdman

Feb 19, 2013 at 15:07

All very interesting this. A few observations/questions:

1. Isn't it as important to understand why an investment has underperformed/outperformed as much as the fact that it has?

2. If a fund has performed well or badly, based on the quants only, to what extent does it indicate how it will perform moving forward?

3. Presumably comparing sectors like UK All Companies and Strategic Bond funds on these metrics is actually pretty meaningless due to the broad range of strategies adopted? i.e comparing apples with and pears

In conclusion, Quants without Qual? Mmmm.

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