During the worst of August’s market shake-out, when Chinese markets were pulling equities violently lower around the world, Vestra Wealth’s CIO Jonathan Marriott took a breath.
Then he took a step back and looked at where long-term dividend yields were. The numbers he saw were a big enough reason for him to advise his clients to buy equities.
Of course, while he felt his decision was the right one, it did not stop him waking up at 4am the next morning to check where markets were, in case he had made the wrong call.
As it turns out, markets had stabilised somewhat and were beginning a slow recovery from their depths.
This episode serves as a good example of how Marriott is approaching investing in a world he expects will continue to offer low growth for an extended period.
“In a movement like the one we saw in August, you have to keep your head, for a start. And then you have to communicate with your clients as much as possible,” he says.
It also serves to underline the long-term approach that founding and senior partner David Scott says is central to the firm’s philosophy.
“When we started in 2008, we wanted to have a business that genuinely offered clients what they wanted, rather than just selling products that generated revenues.
“We felt you could build a better, long-term business by trying to do what the clients wanted.
“There were also a lot of transparency issues in the industry when we started, and we therefore wanted to ensure we were as transparent as possible; for example, we set out to rebate any trail commission that was being paid out,” he says.
Seven years on, with £5.3bn in assets under management, Scott says the firm has achieved that aim.
“We have built a successful, reasonably scaled, transparent business that takes a long-term view,” he says. “And if you look at what RDR has done, it backs up our views on transparency.”
Secret of success
“Ultimately, success is determined by your clients loving being a client, so that they are enthusiastic ambassadors. I am not sure you will ever achieve that but it is something to strive for,” he says.
Scott does believe, however, that Vestra is well placed to cope with the current changes within the wealth management industry.
“The industry has gone from a situation where each of the services – bank manager, stockbroker, pensions adviser, investment manager – were all compartmentalised, to one where everything was housed in big supermarkets.
“Now it seems to be splitting back out again,” he says.
And while he thinks the private banks and the wealth managers are going to struggle in the mass-affluent space, the IFA community will likely pick up on a lot of that business.
Legacy costs
IFAs are increasingly focusing on the advice side of the business and handing over the investment side of things to discretionary managers, he says.
But in order to make that work from a cost point of view, without the use of trail commission, many will have to move their legacy business on to platforms.
