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Wealth Manager Article – “Off the Leash”1 August 2017

Much like the firm’s in-house rescue dog Henry, Laurence Boyle and his team were left somewhat astray when Investec Wealth & Investment Management acquired Williams de Broë in 2012.

In his own words, Boyle’s team became ‘somewhat of an oddity’ within the firm.

‘We were a multi-asset fund business within a discretionary service and that was okay at Williams de Broë because I was the boss and it was for IFA distribution,’ says Boyle.

‘But when Investec came along they had an asset management business with a multi-asset team down in London, and they didn’t have a fund business that they wanted to retain within wealth management.’

Whilst at Investec W&IM, Boyle and his colleague Rebecca Williams managed the £204 million Investec Assetmaster fund range. This was sold off to City Financial in 2015 and taken over by City’s multi-asset head Mark Harris in August 2015. Following the sale, Boyle and Williams left the company.

‘We had 20 years continuous service because our contracts had gone across from Williams de Broë to Investec, so this gave us a little bit of financial power to consider our options.

‘We did speak to quite a few firms but in the end, we wanted to form our own business.’

Having at the time just turned 50, and hoping for the lifestyle change of a smaller, non-City practice, he and Williams set up Maia Asset Management in the West Midlands just over a year ago.

Boyle serves as the fledgling firm’s chief investment officer and Williams its head of research. They also brought across investment assistant Sophie Hine. Regulatory permissions were granted in January.

Part of the reason Boyle made the switch from fund to wealth management is that he saw an opening in the market: ‘We believe that there are IFAs out there which are disenfranchised, small businesses trying to be all things to all men, to manage their clients on an investment management basis and on an advisory basis. I’m talking about the smaller firms that potentially have £10 million to £15 million under influence.’

Businesses in this bracket are at the sharp end of the regulatory margin squeeze he points out, and face an increasingly challenging and thankless task in meeting increasingly stringent regulated standards – especially in how portfolios are aligned for risk mapping and rebalancing.

However, Boyle realised quite quickly that in order tap into this market he needed to find the right strategic partner.

‘We felt that if we could get a partner-ship with a top chartered financial planning firm, then we could move on from there. So that’s exactly what we have done with Opus.’

Opus Group is a business that offers professional advisory services to private and corporate clients.

Opus backed Maia and has a 50% stake in the business. In addition, Opus head and chartered financial planner Ben Rees joined Maia, initially as an investment director, and has since become managing director, focusing on building relationships with its partners, introducers and clients.

Boyle explains Maia’s size and boutique style appealed to Opus because, like the larger discretionary managers, where they would only deal with one or two cogs in a much larger machine, with his firm they get to deal with everyone and work as more of a partnership model.

As part of this partnership, Maia now oversees the management of £75 million of Opus’s assets under management. Boyle says this is just the first of what he hopes will be a series of strategic partnerships with IFA firms.

‘You have got to have a unique selling point as a boutique. That can be a fantastic track record if you are a fund manager that is managing a single asset class like European equity. But for us to succeed it has got to be going back to the roots of how we manage money.

‘But also having this partnership with the IFAs, where they feel as if they can go back to what they are good at, which is financial planning and client relationships, so they can outsource the discretionary management – without feeling disenfranchised.’

He points out that much like with Opus, the smaller boutique model allows IFAs to have a close working relationship with Maia and get to know its people.

Maia launched a suite of five risk-rated model portfolios in May, across a risk spectrum ranging from absolute return to adventurous, with underlying costs ranging from 0.69% to 0.99%.

‘So many people are cost conscious out there. So rather than dilute our alpha generation, we took our tactical asset allocation and applied that to a smart beta portfolio to see what the differences in costs were. Only time will tell in performance.’

At the same time, the firm launch its active mandates. It also launched smart beta versions of its balance, growth and adventurous funds.

The passive versions follow the same top down asset allocation as the active mandates, the difference being the allocation is realised through exchange-traded fund (ETFs).

‘So the question for us was, do we put 20% or 30% in passives or ETFs [into the active portfolios] to bring down the ongoing fund charge? And then what? It is going to bring it down by 10 or 15 basis points.

‘Or do we say right let’s save the whole 50 basis points by having them be 100% passive and let people decide.’

‘When clients say we are expensive, we can say well here is the smart beta version. Then you might find they are comparing apples with apples, and that whatever they have looked at and been told is a lot cheaper, is actually closer to that.’

Boyle says the underlying costs of the smart beta versions of Maia’s portfolios range from 0.27% to 0.37%. This is where Boyle suggests a simple argument of passive versus active is flawed.

‘Using passives doesn’t mean the smart beta versions aren’t active because the activity is what type of index and what type of asset allocation you choose. So if in particular, you went into our adventurous model, we take the global themes of our alpha and apply them to the smart beta version – so things like healthcare and digitalisation.

‘Therefore, it’s very difficult to say that it is not actively managed overall because of the asset allocation over all the different themes. So we know exactly where we are with any cost conscious IFA or their clients and can illustrate “here’s your growth mandate and here’s your smart beta growth mandate and the difference in charges [is] 50 basis points”.’

Content and original article written by Joshua Thurston of Wealth Manager. Full Link here.

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