Posted on Friday 29 June 2018 by John Mulgrew
John Mulgrew speaks to some of Northern Ireland’s wealth management experts about the changing face of the investment market over the last decade
The breadth and scale of Northern Ireland’s wealth investments has changed over the last decade, as Ulster Business found out from some of the top experts in the field.
Jonathan Sloan, director, Barclays Wealth and Investment Management, says the market here has shifted “towards quality which has been driven not only by regulation but also by memories of the financial crisis in 2008”.
“The world can seem very complex and clients need to have highly qualified and professional teams of advisers around them in order to help them navigate this.
“Typically for our clients, we work alongside their solicitor and accountant, tax adviser and other advisers in order to ensure that a totally holistic view of their financial plans and aspirations is put into place and delivered efficiently.
“Also, Northern Ireland has always been an entrepreneurial region and we are seeing a marked increase over the last 10 years in the number of high quality and very often internationally focused firms originating from here.”
He said the market in Northern Ireland is “typified by wealth that has been created by multi-generational family businesses and entrepreneurs behind start-up businesses”.
“We are one of the most successful regions in the UK for new business start-ups and more recently the corporate acquisition market in Northern Ireland is proving to be very healthy,” he said.
“The main concern which clients have is that they do not lose the money which have worked hard to create. It is a big step to engage with a wealth manager and we appreciate that we are advisers and custodians of the assets.
Stephen Felle, chief executive of Davy Private Clients UK says that the “market for wealth management services in Northern Ireland has changed dramatically in the past 10 years”.
“Firms like Davy weren’t a feature in 2008, we are now the largest advisor in Northern Ireland. Many of the small and mid-size IFAs have exited the market, with the banks more focused on core ‘private banking lending and deposit solutions for larger customers.
“Pre-2008 some of the domestic and foreign banks operating in Northern Ireland had offerings in the wealth space too, this is no longer a feature.
“One of the main trends across the UK investment and wealth management sector in the past five years has been the scale of regulatory change. MIFID II, an expansive piece of legislation covering all regulated investment firms in the UK which came into force in January 2018, is the most recent and sweeping example of enhanced rules designed to afford greater protection to retail investors.”
Nigel Crawford is executive director of Quilter Cheviot in Belfast.
“From the point of view of our business, the demographic has changed slightly,” he said.
“If you go back 10 years, there would have been stocks and shares. There is discretionary management, where you give it (money) to someone, and they manage it.
“The actual business we are in has changed significantly, and growth, dramatically.
“Market share gone up nearly in a steady line in the last 10 years, and interest rates are so low. People used to retire, and put the money in the bank.”
But Nigel says that’s changed considerably, with the base rate of interest still sitting at just 0.5%.
“But I think its a better place for the client, not from an income point of view, but regulation is there to protect the client.”
And clients are not only investing money at home, but outside the UK.
“Historically, people would have invested in the UK. Ten years ago it would have been banks and oil companies,” he said.
“They are also having exposure to overseas markets, such as the US and Europe, as well as emerging markets. Portfolios are much more diversified.
“Historically, you would have had what you would have called ‘old money’.
“Now, there are more people who have money, who have created and grown their business.”
Jonathan Dobbin, who heads up Julius Baer in NI, said the market has diversified across Northern Ireland clients. It focuses on clients with a minimum of £1m of investment.
“There is no doubting Northern Ireland is a great place to live and work. Despite the complexities of the political situation here this is a market that is strategically very important to Julius Baer.
“We see Northern Ireland as a very strong base for wealth creation and an economy that has always had entrepreneurialism at its very core.
“Wealth management in Northern Ireland has evolved significantly in recent years, we have seen the gradual repatriation of client wealth – what I mean by that is wealthy families who, in the past, traditionally defaulted to London for their wealth management needs because there had been a perception that the expertise or discreteness wasn’t available locally.
“Clients now have that breadth of proposition, global perspective and investment expertise on their door step.
“There is no doubt lessons have been learnt locally from the financial crisis in 2008; greed has moved to fear, capital preservation and protections are buzz words much more common now than investment leverage and aggressive growth. The crisis has highlighted the importance of a globally diversified portfolio of assets.”
Jonathan said clients also like “simplicity and transparency
And there remains a wide breadth of investment types across Northern Ireland’s clients, according to Jonathan Cunningham, managing partner of Cunningham Coates in Belfast. The company has just celebrated 175 years in business.
“We’ve been here since the beginning of Queen Victoria’s reign. It gives us a bit of pressure to live up to the roots of the firm, and I think that is important.
“In terms of the last five years, or decade, the main change I would see is we are looking at the totality of client’s assets.
“That can include, pensions, trusts and other things, such as property, and other types of personal private business, rather than being ring-fenced by the stock market. It’s more of an holistic service.”
He said clients vary, between those looking at investing their pensions, to stocks, shares, ISAs, right through to a business where a family is diversifying its assets.
The value of investments varies from tens of thousands, to tens of millions, according to Jonathan.
“We would have significant clients in Great Britain that have tenuous connections to Northern Ireland, but have been referred to us by a diaspora from Northern Ireland. We would manage money for families where they have had successful private businesses.”
“The main area of growth is looking at peoples’ pensions, and changing the parameters of how we invest peoples’ pensions.
“Now, pensions can be used as vehicles to pass wealth down through the generations, and that is changing how people are looking at their pensions.”