Increased regulation seeing a number of larger wealth managers raising the level of client assets that they will accept and rising market volatility has seen many investors shifting their focus to boutique firms.
Indeed, in 2014 boutique business increased by 25%, but, which is the right choice for investors, as always, depends on who you are asking.
“As firms get bigger their culture becomes more based around process and formality,” said Chris Mayo, investment director at Wellian Investment Management. “There are more layers of management and regulatory compliance that they have to go through in order to get things done.”
David Rothburn, managing director at Quilter Cheviot, countered: “If a client is looking to invest their savings with someone and they have the choice of a small, relatively unknown firm and a large organisation with an established brand and reputation, who are they likely to hand their money over to? Obviously it depends on the client, but this is a reputation-orientated industry.”
However, there is also the less-oft cited aspect of specialism in a specific area, which Andrew Steel, CEO at James Hambros & Partners, believes lends boutique firms a distinct advantage.
“The current market means that investors are having to look more towards risk assets for a better return,” he said. “While they can access risk assets through a bigger firm, boutiques tend to offer something slightly different and, in many cases, are much more focused on what the individual investors are trying to achieve.”
“Another factor is that the boutiques formed since the financial crisis have reached critical mass and now have a track-record, therefore people can see that boutiques are here for the long-run and are more comfortable using them.”
“Managers leave bigger firms because they are unable to get their own ideas across into the portfolios, which are more led by the larger firm culture, and are hindered as individuals,” Mayo added.
