In an unassuming alley just yards from the hustle and bustle of Old Broad Street, the location of European Wealth’s London base is a fitting embodiment of the firm’s rise from fledgling start-up to eight offices spanning Manchester to Zurich, right under the nose of the big boys.
Having begun his career as a securities clerk, CEO John Morton’s initial foray into wealth management in the mid-1980s was not the most auspicious of starts, with his first office consisting of “a room, a desk and a computer that was still in its box”.
Nevertheless, 23 years and various investment director and CEO roles later, in 2010 Morton’s discontent at what he perceived as the Square Mile’s disinterest in lower-income clients came to a head.
“One of the reasons we set up European Wealth is that I felt the City was becoming arrogant in the way it was running money, treating clients with less than £1m as numbers rather than people,” he says.
“I understand that, because of their costs, for some companies that is the only way to achieve their return targets. But the more focus you put on a few clients or one particular area, the bigger the risk to the business.”
Fortune’s favour
Given European Wealth was conceived during the aftermath of the 2008 market crash, Morton concedes they were “either incredibly stupid or incredibly lucky” but says the timing may also have worked in their favour.
“There was no confidence left in the City,” he says, “but, on the other hand, we were able to attract quality people we may not have been able to today.”
Morton signed up Richard Stammers as investment strategist, and five years and six acquisitions later – with a seventh in the works as Portfolio Adviser goes to print – fortune has worked in European Wealth’s favour.
Considering the driving influence behind European Wealth’s formation was dissatisfaction with market practice, Morton outlines their investment fundamentals as the first differentiator.
“It is critical we take an institutional view,” says Morton. “The old way of looking at each individual portfolio is not the way to do it. We are managing a pot of money for a collective of people, and it must be run as such.”
Stammers adds: “In terms of products, the industry today is diverse but we are specifically geared towards how long people are investing their money for and using that as a starting point before we look at risk.”
The path least travelled
European Wealth highlights the individual managers as the overriding factor when it comes to fund selecting, preferring to use boutique, unconstrained managers while avoiding so-called ‘benchmark huggers’.
Taking this into account, it seems appropriate that in the midst of a bull run the firm is underweight US equities.
“Our US equity weighting is at 10% of the peer average,” says Stammers. “There are no opportunities for US equities to go anywhere. Where are the earnings going to come from?”
This allocation is accessed via the Dodge & Cox US Stock Fund and iShares S&P 500 ETF, the latter deployed as a satellite fund to enable rapid entry to the market and, if necessary, an even faster exit.
