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Wealth Manager: Rathbone's Edinburgh duo on building stability in an over-broked battleground
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by Danielle Levy on Oct 10, 2013 at 00:01
The firm offers a full bespoke service from £100,000 and can offer clients exposure to direct securities from £200,000.
‘In this day and age, we feel Rathbones has something to add on this front. The fact you can invest directly in equities and bonds, from a cost point of view can drop your total expense ratios (TERs) considerably. You have to prove your worth and the investment process is very robust at Rathbones. I think we probably made our names as stockpickers over the modern era.’
Based on the total cost calculation methodology that Rathbones developed with Quilter Cheviot earlier this year, the team estimates a total account charge of 1.5% for a £400,000 portfolio with 20 holdings, breaking down as 30% in collectives; 65% in equity and the balance in cash, inclusive of VAT but not of stamp duty and interest earned on cash.
As the RDR brings improved transparency to the industry, Gunn and Dewar are both watching the pricing negotiations that are happening between the large platforms and fund groups with interest.
Since Rathbones has purchased institutional share classes for many years and as a significant fund buyer in the market pushes for super-institutional units. The duo expect it will prove a net beneficiary of lower annual management charges. This will ultimately feed through to lower TERs for its clients as well.
‘It is a dangerous game with Hargreaves Lansdown writing [to fund groups] and saying “we want it”. If they say they want it, everyone else will say they want it as well. You can see it getting nasty, with people saying they won’t do business with you. I think it has got to be a level playing field,’ Gunn says.
Nonetheless, Dewar notes that on the other side of the equation, the wealth management industry is getting squeezed as the costs of doing business rise and advisers also drive down discretionary management fees.
The team typically favours direct equities for client portfolios, with around 34% of its client base in collective-only portfolios.
Dewar says managers receive ‘tremendous support’ in terms of portfolio construction and risk management, with the latter proving particularly pertinent for the Sipp mandates they run.
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