Jupiter may be one of the best known fund groups out there but in the private client world its presence has always been somewhat understated.
As a house, the firm arguably has as strong a brand recognition as any other in the industry, but it is Andrew Clark’s job to translate this to its private client and charities business, which he now heads.
‘One of the reasons I have come here is because there is a real commitment to growing the private client business. It has sat there for 25 years and we still have clients of that era,’ says Clark.
‘It has always been a little inward-focused, but there is evidence of commitment – reviewing the business, recruiting me and investing in terms of technology – and all of that is now being put into place. It leads us to the point where we can go out there and spread the word in all channels that have an interest in professional investment.’
Clark joined from Schroders in December and admits it was a timely move as Jupiter had already carried out extensive work around issues such as suitability and facilitating adviser charging, ahead of the retail distribution review (RDR). And, with what he describes as the ‘heavy lifting’ already done, he is confident the firm is well positioned to build out its proposition.
In all fairness, despite its low profile, the private client business has been steadily growing, with assets under management ticking up from £1 billion in 2009 to close to £2 billion currently. Clark says 30% of new monies come from referrals from existing clients and the firm also counts a number of Jupiter staff both past and present on its books.
He says the fact Jupiter staff entrust it with their money ‘validates the proposition’, but more than that, it is reflective of the firm’s broader collegiate culture.
‘It’s a great place to work, full of interesting people, and if you get too big you can lose that. The people side of things is important as it drives the business,’ he says.
‘On the private client side, we sit with the retail fund managers and it is hard to overestimate the value of sitting there and hearing their informal discussions. We are on the same floor with some of the best investment names in the country – and I have worked at Merrill Lynch and Schroders.
‘It stacks the odds in your favour if you have people of that calibre and you can feed off that.’
‘Co-location is important and I’m sure all of my colleagues would cite that as being a big advantage of being at Jupiter,’ he adds.
Although aware that many firms claim to be a boutique, Clark says that despite being a £21 billion player, Jupiter genuinely feels like one, with the investment professionals all in the same room, which he describes as a ‘meaningful size, but not a vast trading floor’.
‘People talk about being boutiques, but I have worked at companies of different sizes and the culture is different here,’ he says. ‘You need the resources and scale to support the breadth and depth of talent, but you can be too big. Here we know everyone and the fact we have a table tennis room in what is quite a packed office reflects the culture here.’
The collaborative approach is reflected in the group’s investment process. John Chatfeild-Roberts is chief investment officer, and the positioning of his Merlin multi-manager fund range is taken as a starting point in terms of asset allocation for private client portfolios. Chatfeild-Roberts leads the group’s investment meetings at which all the retail fund managers, who each have research responsibilities, present, and the private client teams’ 12 investment directors all attend.
They then collectively arrive at the best way to implement the ideas generated, which forms a central proposition of unconstrained model portfolios. Although this will provide the core of most clients’ portfolios, it is the individual managers’ responsibility to tailor these to meet their tax needs or other constraints.
‘What resonated with me was giving managers the freedom and responsibility to deliver and I think that is critical. It does come back to the size thing – we are not so large we are doing it on an industrial scale,’ Clark says.
‘The fund managers are free to do what they think is best for their client. The consistency of returns for clients comes from having an investment process that is collaborative. We have a consistency of direction but it is not an unwieldy process which is diluted by having too many committees.’
He describes the firm’s approach to compliance as practical rather than heavy-handed, backed by a process of peer review. This practical approach also translates into how it handles the suitability issue with professional intermediary clients.
Whereas other firms continue to grapple with the suitability issue, for Clark it is actually pretty straightforward.
‘In principle, we will take the responsibility for the suitability of the investments for clients full stop. Therefore the IFA can rely on us doing the work and the suitability file notes being delivered,’ he says.
‘We think it is crucial to truly understand what the client wants and it is a help to the IFA if we do this so they can be out their gathering assets and managing their client relationships.’
The IFA channel is one of Jupiter’s main sources of business, and Clark believes the company’s focus on pure fund management gives it an advantage over some of its rivals.
‘Ultimately we are proven fund managers, we are not doing financial planning and that helps with IFA relationships. It gives clarity of purpose and we are not competing with them. Having worked at other organisations, you can lose that if you are moving into banking and wealth structuring,’ he says.
‘Jupiter has certainly driven the brand and awareness is very strong and that is obviously also very helpful with the IFA market because we have a large presence there.’
Indeed, Clark sees the IFA market as a major growth area for the business. Unlike many wealth managers, Jupiter has shunned launching model portfolios in an asset grab as it would both risk cannabilising the group’s successful Merlin fund range and undermine its focus on running bespoke portfolios.
‘Some of the model portfolios out there, when you work out the full cost, are pushing 3%, which could have suitability issues in this low return environment,’ he says. ‘The Merlin range is so strong in that market and the team rightly says that the total expense ratio is their problem and not their clients’.’
For private clients, Jupiter’s minimum portfolio size is typically £500,000 and the group charges a flat fee of 1.25%, facilitating the adviser charge on top of this. But rather than put downward pressure on wealth managers’ fees, Clark believes the RDR is more about bringing the focus on what advisers levy.
‘We have seen huge variations in adviser charging rates. Some IFAs have been ready for the RDR for a long time, others are struggling with their business models,’ he says.
‘Given there is transparency around adviser charging, it really is going to be a measure of the value of the service the IFA is providing to the client.’
Looking beyond the traditional IFA market, Clark says Jupiter is actively looking to build its offshore business, pointing out that ‘within 20 minutes’ walk either way’ of its Hyde Park Corner offices, there is considerable wealth, much of it international. This drive is likely to see the firm recruit a couple of Channel Islands business development managers, while the firm could also build on its long-standing presence in Bermuda.
The firm’s charities business will also be a renewed focus. Jupiter has around £495 million in charity money at present and Clark says the firm’s longstanding and respected socially responsible investment team gives it an edge
in this market.
Although making an acquisition to boost private client and charity assets under management has not been ruled out, he stresses the focus is on organic growth.
Buying other firms has never really been the Jupiter way, but if it were to change tack, in Clark it has a man with more experience than most in this field.
He started out in the City around the time of Big Bang. And after having studied Japanese, he had an initial stint at a Japanese stockbroking firm before moving to James Capel and then Warburg.
‘I got the opportunity to study Japanese for a year and go to Tokyo through a Warburg and Department of Trade and Industry course,’ he recalls.
‘If you were in corporate finance in London, you generally worked in vast departments crunching numbers in Lotus 1-2-3 or you were dotting ‘i’s’ and crossing ‘t’s’. Unless you were really senior you were not involved in negotiating the deal, and what I enjoyed about Tokyo was that they had much smaller teams and it was much more hands-on, but pretty much 24 hours.
‘There was a lot of M&A activity and we made most of our money unwinding the crossholdings between corporate blue chips. The US and British firms did very well – it was not the sort of work they wanted Japanese brokers to do. We moved the crossholdings into special purpose vehicles through convertible bond issues and I remember jumping on the Bullet train to pick up the broking fees.
‘I spoke Japanese and was a floppy-haired gaijin willing to make a fool of himself, getting it wrong sometimes, which worked well.’
Warburg centred its Asia Pacific corporate finance team in Tokyo, which included the Mercury Asset Management business out there, and when the time came to return home, Clark took a job with Mercury in London, having established a good relationship with the firm.
Mercury was then bought by Merrill Lynch and after running the firm’s Europe, Middle East and Africa discretionary business he moved to Schroders after the international division was sold to Julius Baer.
After a two-year stint at its private bank, Clark’s new role sees him reunited with Maarten Slendebroek, who joined Jupiter in September as distribution and strategy director. The pair previously worked together at Merrill Lynch/BlackRock.