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Why this wealth firm launched an investment trust

Why this wealth firm launched an investment trust

When Stephen Black (pictured left) and Ian McElroy (pictured right) were Wealth Manager cover stars in 2013 they had just set up Tier One Capital.

Recently, the duo entered a relatively unexplored area for wealth firms by launching a property-backed lending investment trust

They discuss why they launched the trust while looking back at how the firm has grown.

 

Why did you launch an investment trust?

SB: ‘What we have done with the trust is try to create an option for advisers to get access to the peer-to-peer direct lending space because it is quite difficult to get it into portfolios in its current forms. You either have to use what are designed to be direct retail offerings, everything from the big boys of the funding cycle to the lower tier providers of exactly the same service.

‘Everyone is kind of doing their own thing in that space and trying to differentiate the good from the bad is a relatively difficult thing to do. Even if you do hit upon a provider you feel comfortable with, just getting it into the portfolio is a difficult thing – because they do not really sit on platforms very easily.

‘So what we tried was to create something that could easily slot into discretionary portfolios. The easiest way to do that was to grab the bull by the horns and go through the significant due diligence process of listing an investment vehicle capable of running on a discretionary basis.

‘We thought if we went with a main market approach and a premier listing rather than a standard one, we would be at the top of the tree from the due diligence perspective and should serve to give those that have dealt with us previously a tremendous sense of confidence in the quality and the robustness of the internal system of control, the underlying credit vetting approach and the longevity and sustainability of the operation.’

 

How has the business changed since 2013?

IM: ‘Vastly is the short answer! It’s pretty phenomenal how quickly time has passed by in what is coming up to four years since our FCA authorisation in February 2013.

‘We’ve built out the primary Tier One Capital proposition to focus on four key areas: cash management, investment management, direct lending and estate planning. We’ve also made superb progress in sectioning off parts of this proposition so it is usable for other advisers.

‘Cascade, our now fully standalone cash management company, has invested heavily into some fabulous proprietary technology in the cash space and after strong investment and even stronger learning curves, the business is a few months away from break even on what looks to be an exciting trajectory to come.’  

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