While the volatility that plagued equity markets in the first three months of this year has subsided and crude oil prices are showing signs of life at last, investors will be looking at their battered portfolios wondering how to rebalance and pivot for the future.
At this point, calls will be made and emails will be sent to financial advisers, accountants, lawyers and trust firms.
Often these professionals will in turn seek out greater expertise. One such source of specialist advice is Quilter Cheviot, the investment manager owned by FTSE 100 insurance and finance group Old Mutual.
Quilter Cheviot’s chief executive, David Loudon, is “very mindful that some of these issues [such as the low oil price] will have a knock-on effect” for investors.
“It is one of the reasons why we have had an extremely volatile UK stock market for some time. That presents a firm like ours with an opportunity because when there is volatility, clients who are perhaps unadvised or intermediaries who are doing their own investing turn to the specialists,” says Mr Loudon.
Old Mutual picked up the Jersey-based company for £585 million (Dh3.11 billion) just under two years ago, hoping Quilter Cheviot’s centuries-old track record could help it expand its services to high net worth individuals.
Quilter Cheviot has roots going back to 1771 and “stamped on us like a stick of rock is we have to have the best investment proposition and the very highest levels of service to our clients”, says Mr Loudon, who was in the UAE last month to launch a representative office in the Dubai International Finance Centre.
The company hopes to replicate its successful strategy over the past 25 years in the UK of using a network of intermediaries to generate client referrals. The approach has helped it to build up its funds under management to £17.8bn at the end of last year, up from £16bn at the time of the announcement of the Old Mutual takeover in October 2014.
There are “similarities [to the UK]” in the Gulf market, says Mr Loudon.
“This [Dubai expansion] opens up an area that is relatively untapped and could easily lead to other locations. Let’s see how this one goes [over the next two to three years]. We have always tended to do things on a methodical basis.”
The Dubai office will be led by two experienced professionals and backed by the 160 or so-strong investment management team around the rest of the business including a “formidable” independent research capability.
Sitting alongside Mr Loudon in a boardroom at the Capital Club, Tim Childe, the head of international for Quilter Cheviot, says that the decision to set up in the DIFC “is the culmination of over three years of research and fact finding” to tap into the region’s “rapid and exciting” development. “It isn’t a saturated market,” he says.
The UAE is “a natural gateway or hub for African business, for Indian business and in its own right”, says Mr Childe.
The regional operations will be “feeding off of the existing offshore business of Quilter Cheviot in the form of the Jersey business. So the entity here will be in effect a business development entity promoting services of Quilter Cheviot”, he says.
The extensive network of intermediaries in the region, many from the big name accounting, law and financial firms, offers a natural opportunity for Quilter Cheviot.
Quilter Cheviot follows their lead, says Mr Childe – their referrals are its “life blood”.
“We take a keen interest in how they see the world, how they see opportunities. Some of these firms already have offices on the ground in the region. They see it as a very important area to do business.”
Quilter Cheviot typically offers clients with about £250,000 and above discretionary investment management services including bespoke or tailored support.
“We do that, one, by having a very experienced and well-established research team and we have 160 investment managers around the business as a whole and those people are keeping in very close touch with their clients. When there is volatility it is important to keep close to your clients and when there is an issue you pick it up very quickly,” says Mr Loudon. “It is very important that the investment proposition is fit for purpose given all that is going on around us in financial markets.”
Given the company’s focus on high net worth individuals, the decline in oil prices from summer 2014 highs of about US$110 per barrel to where they are now at just under $50 per barrel, could dampen much of the appetite for new investment management propositions.
“We bring some initial traction from our existing intermediary relationships in the Channel Islands and elsewhere. Clients [wherever they are] have the same ambition whether it be growth, income, assets protection,” says Mr Childe, who has been with Quilter Cheviot for 26 of the 29 years he has worked in the investment management industry. “We always take a strategic view. Largely based on medium to long-term ambitions, never on one or two-year outcomes. We make a decision for the long term.”
Mr Loudon believes that given the nature of financial markets, levels of service will be key to attracting intermediaries and their clients. “In our DNA is” the highest levels of service, he says.
“[We have to] make sure that our standards of service are the highest. It’s not rocket science. It is amazing how many organisations forget that.”
Mr Childe concurs, saying that “clients want that distinction between advice on pensions and tax and investment because they want that [extra] level of comfort. We are in an age of volatility that won’t change any time soon.”
The backdrop to Quilter Cheviot’s expansion in the region is intense scrutiny of offshore financial centres following the Panama Papers leak.
The veil has been lifted on how the wealthy manage their money and their obsession with secrecy and anonymity.
The fallout has included protests in Iceland leading to the resignation of the prime minister, Sigmundur Davíð, investigations by Australian authorities into wealthy clients of Panamanian law firm Mossack Fonseca and damaging revelations about the personal finances of the British prime minister, David Cameron, that led to the unprecedented public disclosure of his and his colleagues’ tax returns.
There has also been renewed efforts by governments around the world, including in the UK’s, to force an increase in levels of transparency in low-tax jurisdictions. This shift looms over Quilter Cheviot and its ability to attract clients given that Jersey, its Channel Islands base, prides itself on being a world-leading offshore financial centre. The financial sector accounts for more than half of Jersey’s economy.
“If transparency is here for all, then so be it,” says Mr Loudon. “The bit that’s probably been a challenge is that while the veil has been lifted it hasn’t been properly explained.”
People will still look for tax planning opportunities, he says, but concedes that the greater level of transparency is probably here to stay. Mr Loudon says the company holds by “trust and reputation. We have worked hard to build those up.”
Mr Childe says that investment flows have been pretty consistent amid the Panama Papers furore and believes that Jersey offers “a lot of comfort”. “We can navigate through any backdrop as we have proven over the decades.”