The reasons for the launch of wealth management boutiques always sound valiantly familiar: saving clients from the clutches of fee-greedy banks and the need to break from a larger institution to provide a more bespoke service.
For private banking veteran Nick Parker though, the rationale behind the set-up of his boutique was more prosaic.
It was when the trustees of his pension scheme failed to disclose performance figures for his retirement fund he realised he had not paid much attention to his pension, and that others could well be in his position.
‘Sitting at home, I phoned up Aon Hewitt and asked them for the performance history for my pension, something I had never really concentrated on. They said they couldn’t provide it for me and told me to look at all the individual factsheets, and work it out myself,’ he recalls. ‘Before I hung up, I told them that it was absolutely ridiculous.’
Some weeks before, Parker and long-term colleague James Powell had left Banque Havilland, a step the pair had taken after its owners, the Rowland family, decided the business needed to go in a different direction.
At Banque Havilland he was formerly responsible for all private banking operations in the UK, Luxembourg and Monaco.
But the break in 2013 meant he could take time to explore his idea of launching an independent wealth management business that was much more accessible and transparent.
‘During that period, my mind was trying to put these facts together: that pensions providers couldn’t tell me how they were performing and that most of the private banks I have worked at usually operate on a restrictive model, where they can’t advise across the whole spectrum. I realised something needed to be done about this.’
He went on to analyse the business models of a range of wealth managers and how they dealt with the pensions issue.
‘A lot of it I understood from my experience at Citi Private Bank, where I knew what the single and multi-family offices were doing, but I didn’t really get the more high net worth end of the business,’ he admits.
‘I left Banque Havilland, where I looked after ultra-high net worth, and entered a world where I was talking about people’s pensions, which is chalk and cheese.’
However, he realised the retail distribution review (RDR) had opened a huge door for new entrants to the wealth market, while banks were pushing away smaller accounts.
In this environment of transition and increased professionalism, Powell and Parker decided to take the plunge and launch RiverPeak.
Six months down the line, and the firm’s assets under management, which they declined to disclose, are split roughly 50/50 between self-invested pensions and general investment accounts.
‘Pensions advice is already a significant part of our business, and I don’t think that will change. We have a lot of people very interested in the business, and our heritage is very much investment management and looking after people’s money,’ he says.
‘It’s natural they would come to us for that. We advise clients on what to do with their pensions, and make recommendations, which might include a change of wrapper, and then we build an investment management strategy around their pensions.’
This ranges from asset allocation all the way through to bottom-up investing in funds. ‘We will make the recommendations and tell them what we think they should be doing or buying, and report all this in one place.’
The clients’ pensions, investments and ISAs are held on the firm’s platform with typical advisory fees start at 75 basis points (bps) per annum, depending on the amount invested.
RiverPeak does not yet run discretionary money but outsources this service, although Parker says the firm will launch a discretionary offering by the middle of the year.
To get the firm to market rapidly, the young boutique became an appointed representative of network Financial Limited in November, which in turn provides the boutique with support in terms of compliance and infrastructure.
‘As a directly authorised firm, we can scale our business very quickly, and without being capital intensive,’ Parker says.
Financial Limited, which looks after around 350 firms, also provides more clout when it comes to negotiating fund fees.
The company has a buy-list of 85 funds, overseen by Powell, and takes a whole of market approach. Client portfolios are run on a bespoke basis, dependent on a client’s own circumstances, objectives and tolerance.
While RiverPeak’s ‘holy grail’ is investment management, it also offers retirement, tax, estate and inheritance planning as well as life insurance services to clients in the £250,000 to £5 million bracket.
This strategy was outlined and approved in February, when the firm held its first advisory board meeting. In the run up to this, it had recruited a number of senior industry figures including Trevor Brown, managing director of Throgmorton, Colin Day, CEO of Essentra and a former CFO of Reckitt Benckiser.
These were followed by Richard Grainger, former CEO and chairman of Close Brothers Corporate Finance, and Marianne Hay, an ex-CEO at Morgan Stanley, Citi and Standard Chartered’s EMEA wealth divisions.
‘We’re particularly proud of our board,’ Parker says, ‘because of the quality of the people who have agreed to come and help us build the business and because they have great knowledge in the space – unlike some other firms who take board members on just because they bring clients in.’
The advisory board agreed it was important ‘not to grow slowly’ and aim to reach ‘hundreds of millions’ of pounds in assets under management in five years.
Under its business model, its future network of advisers will receive a large percentage of the revenues generated from their clients, with RiverPeak retaining a percentage to meet its operational costs ‘with a bit of margin’ in return for providing the infrastructure.
‘In an environment where private banks are coming down and paying total compensation anywhere from 12% to 30% at the very top end, we are happy to say that a large percentage of the fees will remain with the adviser,’ Parker says. ‘In a nutshell, we are running a self-employed model, under which we want advisers – and preferably, but not exclusively, private bankers – to join us and establish their own business.’
The pair anticipate further investment in branding and suggest the boutique could have ‘around three to five’ advisers by the end of the year, with an additional five to 10 expected to join in 2015.
While RiverPeak has been established in Sussex, where Parker was born and lives, the business could soon open in London. ‘I think we’ll continue to develop the Sussex connection strongly and that’s where we see the majority of our growth happening,’ says Parker.
‘But if an adviser from Edinburgh comes to me and says he is interested in this proposition, there is no reason why he couldn’t be part of RiverPeak. However, we don’t want to be spread thinly geographically. As a start, London, the South East and Sussex are good enough for us.’
Competition does not faze Parker, who says he is not worried about being the new kid on the block in one of the ‘most competitive financial services arenas in the world’.
As competition goes, he says the success of St James’s Place is something he’d like to emulate.
‘They are a great business but they have a challenge in that the number of advisers they have through their success means that they tend to be tripping over themselves. But if we could do as well as them, I’d be delighted.
‘The fact of the matter is that, compared to their restricted status, in our independent model, we have a good opportunity to offer something different to clients.
‘James [Powell] always likes to remind me that “everyone is a potential client”. And there are millions of people in this country that have wealth which isn’t looked after well at all because not all [wealthy individuals] know where to turn to.’