2017 has been a bit of a humdinger for Bristol. Earlier this year it was voted Rough Guides’ Top UK City beating London, Oxford and Edinburgh to the top spot. Then in July, it was donned the coolest city in Britain, also by Rough Guides.
On awarding the accolade, the travel publisher described Bristol as, ‘think London, but smaller and (dare we say it) cooler’.
Nick Lamb, head of WH Ireland’s Bristol office, is of the same opinion.
‘Bristol is like a mini version of London’, he said when I met him at Dom’s coffee house – a café that slots easily into Bristol’s cool reputation, taking the art of coffee very seriously. Beyond this however, the south-western city is not only a financial hub, but also a thriving centre for wealth management.
WH Ireland has been serving clients in Bristol and the south west for over a decade. Lamb himself has actually worked for the firm for 18 years; he spent the first 16 in the London office before moving to Bristol just over two years ago.
It was a welcome return to the city, where he studied and lived in his student days, and a chance for Lamb to get back to working more on the client side, which he really enjoys.
And on the plus side, ‘the lifestyle is great and I can walk to work,’ he said.
In his current role as office head, Lamb oversees the team of five in the wealth division. He and colleague Henry Gronning are investment managers managing discretionary portfolios. Tom Williams and Luke Keattch are financial planners and they are all supported by an assistant.
They are now looking to recruit, either through acquiring an existing team or training someone up from graduate level. This year WH Ireland launched its first graduate training scheme.
Lamb explained how the team works closely together, rather than on an ‘every man for themselves’ basis.
‘The office is pretty small but we have a strong team based environment. The industry can make people individualistic and all about building your own client book, however we all work together to build our client base. Our wealth management and financial planning teams will refer clients to one another to ensure the best outcome for the client,’ he told me.
‘Across WH Ireland, we are ensuring the discretionary arm works closely with our financial planning offering,’ he continued. ‘The Bristol office is a great example of this.’
He stressed how important it is to not think of the discretionary and advisory arms as separate entities. WH Ireland has a history in traditional stockbroking, but they are now moving away from execution only towards offering a complete wealth management service.
‘We are an advice led proposition. We always ask the question: what is the bigger picture for our clients? We don’t just look at portfolios from a stock level,’ he said.
When it comes to clients, the investment industry in Bristol has a substantial pool to capitalise on.
‘It has around half a million people and there is a good deal of wealth. Old money is characteristic of the area,’ Lamb described.
An average portfolio size of their clients is £350,000 and their sweet spot is anything between £250,000 and £500,000. All of their clients have a connection to Bristol even if they live further afield.
Given the affluence in the city and surrounding area, it is no surprise that Bristol is fit to bursting with discretionary fund managers (DFMs). A large proportion of the national private client investment management firms have branches in Bristol, as well as a number of well-established boutique firms.
In Lamb’s view, this vast number of players is not sustainable.
‘We need some consolidation; there are a few too many smaller players who are being squeezed by regulation. The bigger players have economy of scale.’
In September last year, family wealth vehicle Kuwaiti European Holdings injected £8.4 million into WH Ireland taking a 23% equity stake and became the largest external stakeholder in the process. The Bristol branch benefits from having an established, well-backed name above the door.
Smaller DFMs are facing increased costs put in place by the regulator, whilst not charging clients higher fees.
Lamb gave the example of transaction reporting, a new regulatory requirement that will be a further ask on firms’ IT systems.
‘There is so much more data that needs to be controlled, managed and reported and will mean IT costs will increase at a significant pace. At the same time, industry fees haven’t increased much at all, so one needs to be careful how their businesses are run,’ he said.
With so many firms competing for business in Bristol, I quizzed him on what the IFA market was like in the area – are there a lot of advisers? His first response was a wry laugh. It turns out pitching for IFA business here has become rather dog eat dog.
‘Competition in the IFA market around Bristol is very high. There are a lot of IFAs, but they are also well catered for in Bristol. There is a huge demand for financial services here,’ he outlined.
In the last two years, countless DFMs have jumped on the model portfolio service (MPS) bandwagon, all aiming to ride the rapid business expansion wave by capturing the IFA market. This trend has started to slow down in recent months as the MPS space comes closer to reaching saturation point.
Whilst Lamb’s team are not currently using model portfolios – they operate on a bespoke basis – they are looking to build working relationships with IFAs. The only way to do this now, Lamb stressed to me, is to make sure you have something in your offering that acts as a differentiator and makes you stand out.
‘Within the industry, portfolio proposition is changing,’ he pointed out before going on to explain. ‘Traditionally a portfolio has 3 sleeves: fixed income, equity and alternatives through actively managed funds. But could a satellite approach help reduce costs? A core portfolio complemented by ETFs or direct equities. This strategy could be a differentiator.’
The team are making sure they are constructing portfolios in line with this transformation.
‘We are trying to vary our proposition and are looking at ETFs and Smart-Beta products. We are aiming for an integrated active and passive approach,’ he told me.
‘Ideally our portfolios will be lean of cost with a blend of strategies that give us an edge and that aren’t the same as everyone else. It is about making sure we can add value for IFAs,’ he said.
Lamb has a marketing plan in place which will see the team work closely with intermediaries over the next six months. In November he is organising a wine-tasting event for this section of the industry, and in the new year they will host an event for IFAs looking into inheritance tax and AIM portfolios.