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Wealth Manager: DPZ Capital's Zaman on avoiding a 'me too' service

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by Danielle Levy on Sep 06, 2012 at 00:01

The fallout from firms expanding into new non-core areas to grab a greater share of clients’ cash has caused the history of financial services to be littered with failures.

With this in mind, Jersey-based DPZ Capital’s founder and chief investment officer Darren Zaman argues the key to success is to stay focused on your core strengths and never willingly dilute your offering.

‘One of the things I absolutely believe in is focus. Because a lot of us have worked in the service business for 20-odd years, all you want to do is to solve everyone’s problems. You can kind of do everything. But really, what I wanted to be was absolutely focused.

‘We did not want to take portfolios with less than £500,000. We only wanted to take discretionary investment management business and we only wanted it to be in the strategies we built that fit around what we consider to be our strengths. When we started the business, the point was not to get all of somebody’s money, but to market clearly what we are good at and how we do it and if that gets 10%-15% of somebody’s investable assets, that is what we are going for.

‘We focus on quality, we are not discounting our fees or taking small amounts of money, because two years down the road you will regret it and it dilutes your quality and service,’ Zaman explains.

While other discretionary investment managers have sought to capitalise on opportunities to build assets by providing solutions through platforms for advisers looking to outsource investment, particularly as the deadline for the retail distribution review deadline nears, Zaman says this is an opportunity the firm has been hesitant to grab with both hands. Although it runs discretionary portfolios through Skandia’s platform, DPZ’s chief is concerned about giving up margin at the cost of flows that are by no means sticky.

‘There has to be fundamentally something more that we provide in terms of the relationship and values. It has to be a deeper partnership because, in my opinion, if you manage money on a platform most of what people are doing is basically “me too” stuff, which is more or less the same plus or minus 50 basis points in annualised return.

‘Frankly, if you are running £1 billion on a platform for some IFAs for 50 basis points and they say, “We want you to do it for 40 basis points or we are moving it”, you will say yes. If they say 30 basis points, you still say yes.


'How low will you be prepared to go for that? What is the point in being in a business like that? The core of our business is focused on quality, the quality of relationships with intermediaries. Churning out plain vanilla stuff on platforms? Absolutely not.’

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1 comment so far. Why not have your say?

graham frost

Sep 06, 2012 at 14:48

Agree with this, firms need to differentiate themselves from what could become a dangerous industry standard -risk profiling for around 10 models, with increasing similarity at the multi manager level. In order to avoid re-papering clients when volatility bands get blown out, the endgame is likely to be target volatility rather than returns. Interesting to see if this causes everyone to become a momentum player, selling the same assets into weakness and vice versa when they should be doing the opposite?

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