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Wealth Manager: The UK's first turnkey asset manager is unlocking adviser assets
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by David Campbell on Feb 07, 2013 at 00:01
Convincing platform providers to work with him was relatively easy once they saw the potential to consolidate assets, producing the plug-ins to work with advisers’ back office software suites less so.
‘It is a very economical model for the platforms.’ Many advisers having begun using platform-based templates since their launch almost 10 years ago, he adds that in many ways EBI is a ‘logical progression’ for them.
The next stage in the development of the business is winning discretionary powers – immediately after meeting Wealth Manager he was due in Canary Wharf to discuss the progress of his application, which has taken longer than it typically would due to the FSA’s having never previously certified a Tamp.
While the company is not seeking to replicate the traditional arms-length discretionary relationship, Burgess believes it will require limited and specific discretionary powers to expand on its current services. The next big project – provisionally named Optibal – will allow the company to ensure that clients’ allocations do not drift away from the 21 in-house models, a particular challenge when they are risk-blended to produce an optimal asset balance.
Over the distant horizon, he believes the architecture he has assembled has potential as a direct-to-consumer service, although he emphasises this is currently little more than a thought.
‘We are having to ask for a HGV licence when all we really need is to drive a minivan,’ says Burgess. ‘It is a level of empowerment that will allow us to move allocations with markets, not to do any of the traditional work of a discretionary fund manager.
‘One of the biggest challenges for advisers at the moment is investing money into the same template. If you are seeking client authorisation for every move or fund change it becomes nigh-on impossible to keep the allocation consistent as the market moves. [With discretionary permissions] we will be able to rebalance daily, and are talking with [platform providers] Wealth Time and Parmenion about the technology to allow us to do it.’
Combining this with the passive-only portfolio costs and platform fee discounts that will come with scale, Burgess is confident he can bring down the adviser cost to around 12 basis points versus a current, traditional discretionary threshold entry point of around 30 basis points - a cost at which no discretionary could hope to profitably match.
‘It’s going to absolutely kill them,’ he says.
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on May 21, 2013 at 14:06