I would like to explore the question of which type of client is tailor-made for our solutions. My aim is to provide insights in a manner that acknowledges and respects diverse viewpoints. Over the past 20 years, I've had the opportunity to collaborate with a wide range of wealth managers and oversee the compliance of approximately 200 firms. My role as consumer duty champion for two notable UK firms in 2022/23 has granted me a valuable perspective on the essence of real value in our sector and the necessary strategies to realise it. This field is abundant with diverse opinions, often voiced by individuals with strong convictions.
At Perpetual, our journey has been somewhat distinctive, and it’s vital to recognise that we may not be suited for every firm. I’d like to share our approach, hoping it might offer some valuable insights. Our focus isn't solely on the consumer's end result; it revolves around the logic and framework behind our unwavering approach. In my previous roles, I frequently faced challenges akin to trying to fit a square peg into a round hole. These experiences have taught me that sometimes the best course of action is a simple, friendly agreement to part ways.
From time to time, I've noticed certain questions tend to surface in my interactions, leading me to compile a list of these queries. I believe sharing these, along with my thoughts and perspectives, would be beneficial in providing a clearer picture of our approach and ethos at Perpetual.
Engaging in direct competition with individual components like CRM suppliers, platforms, or adviser tools tailored for the mass market isn't our primary strength. While we are certainly open to assisting in the development of such tools, our true passion and expertise lie elsewhere. Our specialisation is in granting enterprise licenses to firms in search of a fully integrated software ecosystem. These firms greatly benefit from our solutions by managing and controlling the system with their own global admin, ensuring a perfect alignment with their bespoke needs.
Typically, an annual fee of £40,000 covers all the essentials needed to consolidate your entire affairs into a single hub. This includes the safe custody charge, ensuring that the platform and pensions for your family group, companies and trusts are complimentary at this level. However, it's important to note that trading in hedge funds and direct equity may incur some additional fees. While we offer ongoing support, staff training would incur extra charges. These arrangements can be complex, but we ensure thorough understanding and clarity during a discovery process.
Yes, we are members of Origo and maintain direct API connections, as well as links through channels like Finio. However, in our experience, a wealth management business functions most efficiently with a single, fully integrated platform that thoroughly supports the core proposition. Our successful integrations with SEI and Benchmark, relationships dating back to 2010, are clear indicators of this approach. Currently, with 80 APIs integrated with SEI, we are prepared to extend our API to accommodate other platforms. Ideally, we see a scenario where the platform's front-end is bypassed entirely, with all operations being managed directly at the client level through the Wealth Portal. In our view, any deviation from this model would compromise the optimal functioning of our services.
Our goal is total integration, which includes not only complete platform integration but also crucial elements like straightforward valuations and transactions. In our pursuit of extensive connectivity, we even receive transaction data from some unexpected sources – it’s quite surprising that the Prudential provides us with values and transactions! This level of comprehensive integration is essential for attaining an accurate GIPS standard Money Weighted Return, underscoring the importance of detailed and precise data.
While Perpetual Wealth Group itself is not regulated, two of our subsidiaries are duly authorised to provide regulated financial advice. These subsidiaries cater to a select group of families, trusts, and companies through the Wealth Portal. Typically, our clients in these categories possess investible assets of at least £50 million.
Many of these clients, whether families or corporate entities, might have their own in-house teams managing significant portions of their wealth. However, they often turn to our specialised services for certain specific requirements. A common scenario involves situations like establishing an Offshore Bond in trust, where expert, regulated advice is crucial.
It's important to note that these services are generally sought on an ad-hoc basis, rather than for ongoing wealth management. Our focus in these instances is to provide targeted, precise guidance in areas where our regulated expertise adds the most value.
Our systems are meticulously designed for enterprise-level financial firms, encompassing financial planners and discretionary fund managers (DFMs). These entities utilise our platforms to create bespoke solutions for their clients. Consequently, while our systems offer considerable benefits, they are not directly accessible to individual end-users. Access to the advantages of our systems is exclusively through the services provided by these professional firms.
Partnering with these professionals means that you indirectly benefit from our leading-edge technology and expertise. Our role is to supply these financial experts with the sophisticated tools they require, enabling them to offer you exceptional service. This approach ensures that your wealth management needs are addressed with meticulous precision and care.
Additionally, by aligning ourselves with clients and professionals who resonate with our ethos, we selectively engage in partnerships that are mutually beneficial. We uphold a high standard for collaboration, focusing on forging successful partnerships rooted in mutual respect and understanding.
No, we've integrated numerous cash flow modellers over time, and have no plans to do this again in the future. Every end client already has a dynamic cash flow model in the Wealth Portal, which can be toggled on and off as needed. This model is fully integrated with their fact find and open banking, functioning optimally when it utilises data from the source of truth.
That's a big no. In our approach to building solutions for wealth managers, we place the client's view at the very centre of everything we do. Our philosophy is clear: the client portal is not just a part of our system; it is the system itself. This means that every tool, from cashflow software and trading platforms to compliance and administration functionalities, is designed with the client's perspective as the primary focus.
In this ecosystem, the client's view is the definitive view. Every aspect of our service, whether it's the integration of cashflow software, the functionality of the trading platform, or the implementation of compliance measures, is crafted to ensure that the client has a transparent, comprehensive, and real-time understanding of their financial landscape. We believe that by making the client's experience our guiding star, we create a more intuitive, effective, and engaging environment for both wealth managers and their clients.
Our unique approach might differ from the industry norms, but we're committed to it because we've seen its benefits. In a world where financial services can often feel detached and complicated, we offer clarity and cohesion. Everything we do, every feature we develop, is for the client to see, understand, and benefit from. It's about creating a system where the client is always in the loop, always informed, and always at the heart of every decision.
We're proud to walk this path, one that prioritises transparency and client engagement above all else. It's not just about providing a service; it's about fostering a partnership where the client's view shapes the journey. While our path may be unique, we acknowledge and respect the diverse methods and approaches taken by others in our industry. Each strategy has its merits, and collectively, they contribute to a rich and varied financial landscape.
Currently, our primary focus lies in quantitative research, an area where our expertise is especially prominent. This makes us ideally suited for evidence-based and passive portfolio construction. Typically, the average ongoing charge for an index portfolio is 14 basis points (bps). We expect firms to manage these portfolios either under their own permissions or in an advisory capacity with the end client. Alternatively, we can handle mechanical rebalancing on their behalf. Furthermore, we provide a service to automate this research for investment committees, which includes the storage and monitoring of strategies, as well as tracking changes for compliance and oversight purposes.
Besides our in-house capabilities, we also conduct daily research on portfolios managed by external investment managers, comparing them against specific benchmarks. The scope of this research is vast and too comprehensive for a detailed discussion here. For instance, take an end client who pays 75 basis points (bps) plus VAT for a portfolio managed by XYZ manager. We rigorously analyse and assess whether this portfolio is delivering genuine value compared to its peers, based on a risk-adjusted basis, backed by concrete evidence and factual analysis.
Artificial Intelligence (AI) has undeniably become a pivotal element in the current technological landscape. It's shaping much of the content we encounter daily – possibly even doing a better job at answering this question than I could. From my perspective, the proverbial Pandora's box of AI has been opened, and its potential can't be ignored.
As a Microsoft Dev shop, we've already begun harnessing AI for tasks such as grammar and spelling checks while maintaining the firm's unique tone of voice in client interactions, and for generating suitability content. This integration has proven invaluable, particularly for responding to technical queries in our Wealth Portal. By tapping into our own content and tax tables, AI enables us to provide accurate, efficient responses. However, it's crucial to be aware of its limitations and to use it responsibly.
In our endeavour to bridge the advice gap, AI has emerged as a key tool, especially in our not-for-profit initiative aimed at providing generic advice. This technology will be a cornerstone of our Wealth Portal, empowering our wealth management clients to utilise their firm's model for efficiently addressing client queries and enhancing overall client engagement.
Family Offices will also find immense value in AI, especially for navigating complex queries on topics like periodic tax charges. Nonetheless, with all innovations, especially ones as powerful as AI, there are significant compliance considerations to keep in mind, including data protection and ethical use of AI.
In summary, we have embraced and will continue to embrace AI, always acting responsibly and viewing it as an instrumental tool in advancing the provision of financial advice through factual, data-driven insights.
From an AI's perspective, the integration of AI in wealth management is indeed a transformative step. It offers a unique blend of efficiency, accuracy, and scalability that can significantly enhance the quality of financial advice and client service. The key, as in any technological adoption, lies in balancing innovation with ethical considerations and regulatory compliance.
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