So much so that last week his firm won three awards at Portfolio Adviser’s inaugural Wealth Manager Awards.
To see the full list of Portfolio Adviser’s top eight wealth managers, click here…
Graham Coxell, CEO at Rowan Dartington, apologises for not having a business card at hand but passes on instead a series of cards with tips on emotional intelligence. Something of a Renaissance man, he is involved with another business that makes the cards – a firm of occupational psychologists – and he’s been keen to implement the principles they impart at Rowan Dartington since he took charge in March 2011.
Coxell talks about wanting employees to feel “significant, competent and liked” by clients and business partners; this objective forms the core of engaging in an “authentic” culture.
A reshape of the Rowan Dartington employee base has played a major part in turning the firm into a profitable business. At the time that a Coxell-led consortium acquired Rowan Dartington in early 2011 it had around 85 employees; the head count shrank to 70 before rising again to around 100 today.
Ringing the changes
Senior recruits include chief investment officer Guy Stephens and head of collectives research Tim Cockerill, both part of a centralised research team in the Bristol HQ (one of six offices). The team’s expertise feeds into asset allocation and investment selection for the firm’s private clients, alongside its ¬discretionary arm Signature and IFA business Stafford House Investments, which was acquired in early 2012 and by the end of the year had brought in £45m in new client money.
With the changes brought in by RDR, many IFAs are anticipating a tougher ride from the FSA and its eventual successors. For Coxell, though, the new regime has opened up the perfect opportunity to move into the wealth management space.
He says: “In 2010, Rowan Dartington lost around £1.2m. We bought the business in March 2011, and despite the macro-economic factors turned that loss into a profit within a year. It forced us to get our cost base down to a level that we knew would make us profitable in an RDR world.
“We have always been buying institutional units on the fund side, and our total expense ratios are very low because we invest in directly held equities and fixed income as well as collectives. We think there is a great opportunity for IFAs to outsource their investment management to us.
“Our view is that RDR will sort the wheat from the chaff in terms of people that have previously quoted an annual management charge of, say, 1.5% but have total expense ratios nearer 3%.”
However, in keeping with the emotional intelligence ideas that he brings to Rowan Dartington – mistakes are seen as occasions for learning rather than failures – Coxell is not entirely enamoured with the FSA’s current approach to rule making.
Regulation through fear
“I do feel that the way we are regulated is through fear: don’t question, challenge or seek to understand the regulator,” he says.
“Often it is regulation through hindsight, so it applies today’s rules around suitability to things that happened six, seven or eight years ago. The regulator talks about embedding the values of TCF and creating the right cultures, but as a senior manager I am a believer that we have to practise what we preach. We can’t say be authentic and be open, yet knock someone’s block off if they get it wrong, and that’s the same with the regulator.”
Rowan Dartington offers its clients three different ways to invest. The first is a collectives-only service, run by Cockerill, with five model portfolios. This is charged at around 1.35% to 1.45% (30 basis points for custody, 35bps for management and an underlying fund charge which is usually between 70 and 80bps).
A hybrid or tailored service is the second option. Half of the portfolio’s investments are made into direct equities or bonds with funds used to gap-fill in more esoteric areas, such as emerging markets. The TER here is slightly lower at around 1.15% to 1.25%.
Third, there is a bespoke service with a 1% TER on investments over £100,000. Here, the IFA will take some responsibility for the investment content (passive funds, say) and do their own risk research and asset allocation. Rowan Dartington then takes on directly held investments.
The investment team meets every week, with a further asset allocation meeting on a monthly basis. Funds are accessed through quantitative and qualitative filters and given a one-to-five risk rating.
A new ‘4D’ investment process allows advisers to construct portfolios and monitor them across four dimensions: security risk, portfolio risk, asset allocation risk and geographical positioning.
Coxell talks a lot about cost. At a time when equity markets were going north, higher charges were “lost in the noise”, he says. “In a more challenging environment, charges can be a big chunk of the returns you are providing, so visibility of those charges is far greater in a market that is more challenging.”
TER turn-off
He adds: “Clients don’t want you to talk to them about total expense ratios, which they won’t necessarily understand. If you went to buy a new car and the seller started to talk about the fan belt, nobody is really interested in that.
“Does it drive well and does it look good is what you want to know. In that sense I don’t think the client will ever fully understand the implications of RDR in a way that the regulator would like them to.”
Much has changed at Rowan Dartington since Coxell’s arrival, and given his restless nature it would not be a surprise to see further new services offered in 2013. One possibility is a move towards a wealth manager platform.
He explains: “A big opportunity for wealth managers post-RDR is to offer online trading capability on an execution-only basis but also do discretionary. We are looking at ways of linking our technology to the underlying technology of the IFA. IFAs use their own back-office systems, we just plug into those.”
As long as the partnerships follow the same “authentic” cultural approach that Coxell preaches, there is every chance it will be a success.
