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Wealth Manager: Arbuthnot's investment boss on taking a bit-player to the big leagues
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by Elsa Buchanan on Oct 17, 2013 at 00:01
Since his arrival at the private bank in 2005, StJohn Gardner, Arbuthnot Latham’s head of investment management, has helped drive the company’s assets under management (AUM) up by 500%.
Over the course of just eight years, Gardner has established a range of new services, introduced a collective investment arm, launched an absolute return portfolio and, more recently, helped set up the bank’s first overseas office in Dubai.
‘When I joined, I was given an opportunity by the then-CEO, John Reed, to start on a blank sheet of paper and create a brand new investment service. At the time, the team was investing predominantly in stocks and bonds: it needed to be broadened to a wider range of mandates and incorporate more open-ended funds.’
Gardner, along with David Kidd who also joined the bank in 2005 and now serves as chief investment officer, first established a client risk-profiling process.
He says Arbuthnot Latham was the first company in the UK to use what was then an independent research company, Ibbotson Associates, for quantitative client risk profiling.
This was followed by the introduction of a new charging structure, a switch to rebating all trail commissions to clients and the elimination of transaction fees.
‘I was extremely keen on eliminating any conflicts of interest. I had seen too many poor industry practices, particularly in terms of fee charging between clients and banks,’ says Gardner.
Fees currently stand at 1.25% per annum on the first £1 million, 1% on the next £500,000 and 0.75% on all assets over £1.5 million. For portfolios introduced by intermediaries, fees are flat at 1% to facilitate adviser charging.
‘As a London Stock Exchange member, we can also deal directly with the market, eliminating third party brokerage on smaller trades,’ he says, adding this helps keep fees down.
When he joined Arbuthnot Latham in 2005, the private client portfolios were predominantly invested in equities. Believing they were too equity-oriented, he built in greater diversity, using some alternative asset classes, including property, commodities and hedge funds, as well as exchange traded funds and index-trackers, and open-ended funds.