Posted on Thursday 14 October 2010 byUlster Business
With investors looking to improve return on their investments in the current low interest rate environment, Ulster Business talked to wealth management company, Quilter, about the approach taken by its Belfast office.
Not many UK companies were brave enough to establish a new business in Northern Ireland in early 2008.
At that time the financial crisis was in full swing and confidence in both financial institutions and investment markets was at an all time low.
But that didn’t stop investment management company Quilter, which opened its Belfast office almost three years ago.
Having occasionally done business in the province previously, the London-headquartered firm, which has 11 offices in the UK, Republic of Ireland and Jersey, saw Northern Ireland as a market with real potential for solid growth.
Quilter had been looking to set up shop here for some time and the early days of the recession actually proved to be the perfect time to make it happen, says Nigel Crawford, head of the Belfast office.
“There was a major downturn in the market and when we opened up a lot of people said ‘why would anyone open up at a time like this’? But it turned out to be the ideal opportunity. We were able to work with clients to ease any of the concerns that they had and to position their portfolios going forward,” says Nigel.
“It wasn’t a case of Quilter coming in here to make a quick buck and then leaving. We opened the office with the view of it being here for a long, long time.”
Local investors might not know the name but Quilter can trace its ancestry back to 1777 and has a strong reputation in the investment management world. Its customers include private clients, trusts, pension funds and charities of varying sizes.
The company currently has a massive £6.9bn in assets under management, which gives it the scale needed to engage directly with the companies in which they are investing to make sure they are buying the right investments at the lowest available rates for clients.
Nigel, who spent 28 years with Northern Bank before jumping at the opportunity to establish Quilter’s local operation, says that the firm’s approach to investment management is what marks it out from its competition.
“What clients are looking for is a business that has a strict investment process. The days when people just picked a stock because it looked cheap are gone,” he explains. “We position portfolios for the clients’ benefit.”
Quilter Belfast currently has a team of five, but Nigel says it is “actively looking” to increase staff as the business grows. The team puts a focus on building strong personal relationships with its clients and making sure it communicates its decisions with them.
“Northern Ireland is a small place. Everybody knows everybody. So they have to trust in you and know that what you do is on a confidential basis,” says the Quilter boss.
Most of the firm’s business comes through introductions from independent financial advisers (IFAs) and intermediaries.
“The business is set up to provide the sort of services they need,” notes Nigel. “With the new legislation that’s coming in, it takes the risk away from them of selecting the investment. They give advice on what sort of investment a client should consider but our investment managers make the investment. It frees up more time for them to look after the clients and reduces risk within their business.”
Quilter’s local investment managers have access to the resources of its regional network as well as the stock selection expertise of the company’s in-house research team in London, which provides detailed assessments of everything from UK, US and European equities, bonds, collective investments, funds of hedge funds and fixed interest investments.
While they do work to models, each investment is adapted to the circumstances or nature of the investor and what they want.
In the current market, where interest rates and bond yields are very low, Nigel says many of his clients are reassessing long-term investment strategies.
“There are investments that people thought would always be secure. But we’ve seen what’s happened in a number of sectors to dispel that notion. A lot of people who had their money in one area have suffered dramatically,” he says.
“Historically people had portfolios with 10 shares in and if one share went down it dragged the whole performance down. What we do is look at all the investments and go through them and decide what the best mix is.”
While economic concerns and plunging stock markets have led to a rush towards cash and fixed interest investments over the past two years, many clients are now realising they are getting minimal returns from these asset classes.
The Quilter director notes that the shake-out that occurred in the equity markets has forced a lot of listed companies to significantly reduce their debts and become leaner, meaning that many are now much better positioned to grow profits and dividends going forward.
Quilter focuses on diversifying its clients’ investment portfolios to ensure they have the right weightings – something that Nigel believes more and more investors will do once the impact of this month’s Comprehensive Spending Review on the economy becomes clear.
“There are a lot of changes happening in Northern Ireland, we’ve all heard about the potential cuts in the public sector. We don’t know what’s going to happen but people will have to consider what they are going to do with whatever money they have or whatever pension provision or investments they have,” says Nigel.
Quilter is, he adds, very clear about communicating the risks and rewards of its investment strategies to clients, but he is keen to point out that its strategies are not swayed by particular investments coming into vogue for a short period of time.
“Quilter is not the type of company that wants to shoot the lights out and take high risks with clients’ money. In the long-term, what you are trying to do is manage someone’s aspirations. We’re not in the position of taking high risks,” he says.
“We will make tactical decisions about what we want to be in. The flavour of the month is not always the best thing to invest in.”
While there is competition in the wealth management sector in Northern Ireland, Nigel clearly believes Quilter’s focus on relationships with clients and intermediaries, strong compliance culture and dedicated staff make it one of the best.
“What we aim to do is to continue to grow this business as much as we can. With the people we have in place I believe we will do that,” he says.
“Thankfully the office has been a big success, and that’s all down to the support of the people that have introduced business to us. We’re well ahead of where we anticipated being and I would hope over the next few years that Quilter would be considered the major discretionary wealth manager in Belfast.”