Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a707093
Are we witnessing the death of the small client?
by Elsa Buchanan on Oct 04, 2013 at 10:57
Barclays’ incoming chief executive Peter Horrell’s decision to move clients with portfolios under £500,000 to a new ‘softer touch’ service has shown that for some wealth managers, size does matter. But can other managers really capitalise on smaller clients?
For Simon Milne, a director at Aubrey Capital Management, the answer is clear.
‘Our experience is that larger clients are less profitable as they have the power to dictate their fees, whereas someone with £500,000 to invest doesn’t have that leverage.’
The firm does not have thresholds, as it says it prefers to look for potential growth in smaller clients.
‘We come from a more socialist mentality and rather like to see the little acorns grow with us. We would be mad to say no to a rich man whose grandson is turning 18 and wants to take out his first ISA,’ said Milne.
However, Maslinski & Co founder Michael Maslinski argues the sub-£500.000 client bracket is ‘not economically viable’, because of costs trickling down from regulation.
‘There is no advice industry for people under £500,000 any more. It’s gone,’ he said. ‘It is the death of the smaller client.’
At Manchester-based private client stockbroker Pilling & Co, thresholds are set at £20,000 for a client wanting to use its model portfolio service and £75,000 for its discretionary and advisory services.
Alistair Hodgson (pictured), an investment manager at the firm, said that while low compared to some of its peers, these could yet be reviewed upwards.
‘I say £75,000, but quite frankly I should probably say £100,000. For £75,000 we’ll offer the service but we would probably use more collectives for that client.
News sponsored by: