Robo versus traditional wealth management

The advent of “robo advisers” has provided some investors with an opportunity to take a different approach to managing their investments, and undoubtedly some are ready and willing to rise to the challenge.

By Samantha Boyd, Investment Director

At Rathbones we believe that nothing can compete with the personal service you receive from a dedicated investment management professional – i.e. a human being.

Rathbones offers discretionary fund management to individuals with at least £100,000 to invest. For many of our clients, this money represents a lifetime of hard work and saving, and we take the responsibility for managing it very seriously.

Our aim is to build a lasting relationship with each of our clients and to understand what they need and what they want their money to achieve in the long term. We spend time with every client, understanding what they really want from their pot of money, and the risk they are prepared to take and we invest accordingly.

The service we offer includes regular update meetings where we give an account of our performance. Clients can quiz us as to how we have performed against what we have set out to do. It is worth remembering, of course, that if performance has been significantly better than expected, we may need to reconsider how much risk is in their portfolio.  

The primary concern for many of our clients is preserving their wealth so they can pass it on to future generations. We work closely with families, and parents often ask us how to educate the younger generations in financial matters. In some cases, where clients feel it is appropriate, we get to know their children and introduce them to the world of investment management. Rathbones offers “financial awareness” training to people between the ages of 16-25 to help them start thinking about managing their money. This also includes things like CV workshops and interview techniques which we know they find very helpful.

It is our firm belief that clients cannot be pigeon-holed. A good investment manager will look at a client’s overall financial situation, including assets like SIPPs, ISAs and main accounts. We also need to bear in mind that there is usually an income requirement, tax consideration or ethical tilt to be considered; no one client is exactly the same. We then tailor the portfolio accordingly to ensure those needs are met. We also ensure that people are taking their full tax allowances annually, and not overlooking products like ISAs and JISAs.

This allows for maximum flexibility in a client’s investments. While we invest for the long-term, we are also able to make quick decisions and adjust a client’s portfolio following major market events as appropriate. We have an exceptionally well-resourced research team in-house and have access to a wealth of information that helps us keep portfolios aligned to clients’ objectives in the wake of things like the US election or Brexit, and keep the client abreast of situations as they happen.

Understanding market fluctuations can be daunting, and sometimes you need a conversation with a human being to put things in context. We read the same news articles, listen to the same radio broadcasts and watch the same TV programmes as our clients. We can sympathise with their view, put it in context and give them the other side of the story so that they have a more balanced picture. The important thing is that they’ve had a chance to discuss it and feel better for having done so.

We also speak plain English! We can help liaise with accountants and solicitors and explain things in language everyone understands.

Sometimes clients need short-term capital. Rathbones has a banking licence and is therefore able to offer bridging loans (subject to certain criteria), if, for example, a client wants to buy a property for one of their children without touching their investment portfolio.

With the rise of philanthropy in recent years, an increasing number of clients ask us to arrange charitable gifts. We are always happy to help with this and can liaise with their accountants to do it in the most tax-efficient way for the charity or for the individual, as the client prefers.

There are many aspects to successful investment management but you cannot beat the human touch. Overall, we believe that when it comes to managing your money, you get what you pay for. If you want to protect your family’s long-term financial position, nothing can compete with the high-quality personal service that you can and should expect over the long term from your wealth manager. 

This article first appeared as part of "Head to head: Robo advice versus a traditional wealth manager" on MoneyObserver.com