Senior industry experts moving away from larger firms to explore diversified asset classes and find niches is “a trend which will continue in the UK market”, Bedrock’s Zurich managing partner, Alexander Classen, told thewealthnet.
Alexander Classen joined Bedrock 18 months ago, after 25 years with Pictet, Goldman Sachs, Morgan Stanley and most recently, Coutts as chief executive of the international business. As boutiques are being created in the marketplace, “more and more talent is coming out of financial institutions”, and the historic bias towards UK equities continues to shift towards a more international view of the investment world. “This is a healthy trend from the client exposure point of view,” said Mr Classen.
Clients approach Bedrock, according to Mr Classen, looking for “objective advice and for somebody to be on their side of the table”. Furthermore, clients are attracted to the ‘one stop shop’ service Bedrock offers, taking away the ‘major headache’ of engaging with multiple counterparties. While clients “need to be advised and see custom reports providing a consolidated view of their wealth”, they do not always approach Bedrock with investment-related questions, often requiring assistance with non-financial needs such as setting up a philanthropic foundation and finding a school or house following relocation.
Bedrock’s in-house back office expertise and reporting capability framework, which allows clients to see a consolidated picture of their wealth across all the accounts they hold both with and beyond Bedrock, “became so highly rated that we made a business out of it”, Mr Classen said. BRT is a platform that is being offered to peers, hedge funds and small private banks to allow clients to view all of their assets, “from equity exposure and their painting collection to their private jet”. This kind of ‘sophisticated’ reporting is something “not many institutions are able to provide”, Mr Classen added.
Despite the current trend towards automation, ultra-high net worth clients often present “a degree of complexity that goes beyond what robo-advisers capture”, and robo-advice is not a “pressing need” for the ultra-high net worth clients of Bedrock. Though the firm is “embracing” the digitalisation of internal and external processes, and aiming to achieve adegree of ‘paperlessness’, he noted that there is “not a strong desire from clients to do everything digitally at the moment”.
Another trend which Mr Classen identified is thematic investing on the equity part of client portfolios. This is “not only a differentiating approach, but one which can generate substantial added alpha to client portfolios”. Over the last few years, Bedrock has increased its use of thematic investing over approaches more constrained by a particular sectors or geographical markets. Themes Bedrock has explored over recent quarters include artificial intelligence, biotech, mobile payments and ‘silver age’ equity strategies. Additionally, Bedrock has seen rising client appetite for real estate exposure.
In addition, impact investing is an area which has been the source of much discussion within the industry recently, particularly as something “millennials are increasingly focused on”. Though Mr Classen noted that Bedrock has “not seen a tsunami of demands from our clients about this”, it is exploring “the best way to offer these kind of opportunities in future”.
Boutique wealth managers have to be at the ‘forefront’ of identifying new investment trends and asset classes, Mr Classen believes, and it is increasingly important for them to “differentiate from the mainstream”. What Mr Classen is certain will not change, though, is multi-asset portfolios being the “cornerstone” of Bedrock’s investment strategy, which have been at the company’s core “since day one”.
In terms of the future, Bedrock is looking ahead, and considering its business model with regard to millennials, and their portfolio needs. “We need to think about what our service delivery model is going to look like – we are expecting increased technology digital channels and processes in the portfolios of millennials,” Mr Classen said. He concluded: “We feel well equipped on both fronts and are working towards ensuring that this type of clientele will be getting the content and delivery that they would expect.”