PA ANALYSIS: League tables for wealth managers a must

A league table of wealth managers must be published to allow genuine peer group comparative analysis


I have never gone through the process myself due to certain investment limit limitations…but I imagine most wealth managers are probably pretty good at one-on-one conversations, explaining how precise portfolios have performed for their clients, why, and what recommendations need to be made.

The Sunday Times, however, found that in more general terms wealth managers are “far from transparent when it comes to revealing details of performance and charges”.  And this is hot on the heels of the FSA writing to the chief executives of wealth management firms after a sample study found 14 out of 16 firms posed "a high or medium-high risk" of detriment to their customers.

It added that, where performance was provided, the average wealth manager was exactly that, average, while the report went on to say: “If you hunt down the best in the industry you could find excellent returns.”

And therein lies the problem – how do private clients know which is the best wealth manager for them, and how do wealth managers compare themselves with their peer groups?

There are organisations such as Asset Risk Consultants and Enhance both Channel Islands-based, who do compare how wealth managers run similar portfolios but, understandably, they will not reveal specific client (i.e. wealth manager) details without upsetting their whole relationship.

This secrecy must change, and it has to change for the benefit of the industry as well as the benefit of private clients.

As there is with investment funds, a fair comparison of wealth managers is possible and any comparative table should be regularly published, and those (such as HSBC Private Bank and Killick & Co, as named by The Sunday Times) who refuse to should be regularly punished.

It is time that a league table of wealth managers is put together, using measures that genuinely represent what clients want from whoever manages their money, be it on an absolute return, capital protection, inflation-plus, shoot the lights out or income-generating basis.


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