Portfolio Management
Working With Exciting New Clients
We get excited when a client comes through the door and is testing us and our processes. They’re doing it for the right reasons, to grow or preserve hard earned wealth, and want to make sure that we give them our best in terms of appropriate investment advice and strategy. Sometimes that is suggesting that they shouldn’t invest into risky assets and sometimes that means designing a solution that fits the client’s specific needs.
Two cases spring to mind. One a very successful entrepreneur wanted to invest a significant element of his family’s wealth. In our view, at the time equities were likely to return 5-6% over the medium term, so a properly constructed diversified portfolio would have been appropriate given his answers to the risk questionnaire that all investing clients go through.
Understanding Your Client
When I met the client, it was clear to me that the paper answers didn’t match the temperament. Whilst on paper he had suggested that he would be willing to see a 10-15% fall in value of the invested wealth in anyone year, as is potentially the case in a recession, given the expectation of recovery and compounding growth over a 7-10 year investment period, he was quite shocked that such a decline could take place.
His long-time friend and advisor, agreed that the client’s reaction to such an outcome in the short-term would be to ‘cut and run’ and hence miss out on long-term returns, we agreed that the best thing for the client were that they stick to investing in their sphere of excellence where they felt they had a better grip on outcomes. Sometimes sticking to your knitting is the best advice especially if an individual isn’t willing to be open prevailing volatility that most investments expose them to.
A second case was where a client had sold a business holding and wanted to get assurance about investing and financial services. The investment Team worked closely with the client partner spending time to get to know them. This included going through the process of how Artorius design an investment solution to deliver an income that met their projected spending needs. They didn’t want excessive returns, and wisely took their time to get to know us. We started to invest their wealth over a period of months so that they became assured and used to ‘normal’ equity market volatility.
In time, they have referred other clients to us, not just because of relatively good investment returns, but because we took the time to make sure they were doing the right thing for them, and that we were the right team to be trust with their wealth.
Funnily enough, they were concerned at one stage because the returns generated were far in excess of what we had led to expect, and so we explained why that was, and not the norm and we were not taking too much risk.
“I like the global aspect of the equity allocation as it provides access to a wider opportunity set typically seen by UK wealth managers.”