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Tatton Investment Management – Best Boutique Wealth Manager


Lothar Mentel, CEO and CIO of investment manager Tatton Investment Management, reports that the firm has had a good year with assets under management increasing by GBP1.2 billion over the financial year to end March to GBP6.1 billion.

The heart of the Tatton proposition is its model portfolios, offered at a fee of 0.15 per cent on 12 adviser led investment platforms under a discretionary management agreement and available exclusively through financial advisers.

“The money is coming from the same clients we have always marketed to,” Mentel says. “It’s mostly private individuals who have their pension savings, ISAs or general investment accounts, on platforms who use our discretionary portfolio service following recommendations of their financial advisers.”
Mentel believes that they are one of the few firms for whom MiFID II has been a positive force as it has proved to be one of the big themes over the year.
Advisers are more focused on cost effectiveness post MiFID II, Mentel believes, and also the clients, who were conscious of the fees they were paying, now see them listed out in a six-monthly report.
“It tells them in pounds and pennies exactly how much they are paying in fees,” Mentel says.
The increased compliance requirements of MiFID II have also impacted on financial advisers who need a cost-effective solution to dealing with so much more paperwork.
“It is the heart of our business model,” Mentel says. “And the only way we can offer our services at 15 bps is that we don’t have that fixed cost block other firms have. We don’t have the last mile where you touch the end client, which is where the costs are. With us, the adviser holds the client relationship so we can focus on investment management.”
Tatton’s model portfolios now total 29, and last year’s introduction of an ethical investment offering has proved popular with clients, with some GBP100 million in ESG portfolios.
“ESG has been immensely popular with us,” Mentel says, “and a great introducer for us which we didn’t see coming. There are lots of firms who would not have got in touch but have because they have clients who want something that takes account of ethical considerations and then they have looked at what else we do, which has brought in new business flow from firms where we haven’t had to knock on their door.”
The problems with offering ethical portfolios is that everybody’s ethical position is a bit different, Mentel notes. “If you are running a service to bring this to many people, there will always be certain compromises.” 
The ethical portfolios were better performers last year for structural reasons, as many ethical companies sit within the technology sector, which did well last year, and were US stocks, which also outperformed.
The model portfolios use tracker funds as passives, rather than ETFs. The ETF dealing fee of say GBP10 a trade makes it more expensive for a client who wishes to withdraw GBP1,000 a month, for instance, from 15 holdings. “That example sees GBP150 lost in dealing fees, which makes ETFs a problem,” Mentel says. “And there are enough tracker funds to get the exposures that we want.”
A new development for the firm is the arrival of Clare Bennison, ex-Brooks Macdonald, who is creating slightly more expensive bespoke portfolios on the platform. 

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