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Octo Members Group founder reflects on UK wealth industry


Having spent 30 years as a wealth manager, been named wealth manager of the year by a number of august institutions, and enjoyed a significant media career, Lee Robertson has moved on to found and lead private social network for wealth managers, the Octo Members Group.

The group is a free private social network, with no pesky ads from headhunters or product providers, as it takes no advertising. It has gained over 1,000 members since launch in April, drawn from the IFA community, paraplanners, compliance officers and people in fund sales who are looking for: “Brains trust type stuff that gets us thinking,” to quote Robertson.

“We are not a fact sheet dump,” Robertson says. The network is supported by paid for selected content which helps with the costs and forthcoming developments.

The recent Woodford story has been much discussed on the site. Robertson says: “I think he has a longstanding track record of being a very good fund manager, a value investor and an activist, and he has delivered well for those investors who have invested with him.

“Where I think issues have arisen is that there was too much illiquidity in the fund. While there is the 10 per cent rule on illiquid assets, there have been quite legally other ways to potentially circumvent that which may have surprised people.”

The real question for Robertson is how suitable funds with such illiquid holdings are for retail investors. “I think the authorised corporate directors (ACD) have a lot to answer for,” Robertson says. “They are there to give challenge and to see that funds are being run in accordance with their mandate and are reporting properly. There is real potential for conflict here when an ACD firm gets large fees from a fund group. “Are you going to march in and say ‘are you sure you know what you are doing’?”

The senior manager certification regime (SCMR) and the extension to include non-executive directors (NEDs) coming in at the end of this year will, Robertson believes, be a welcome development.

“But will independent non-executive directors be strong enough at board level. The character of many active fund managers is very strong and you would have to be particularly strong on the board to stand up to some of these managers.”

He also observes that with a tenure restricted to two years, a NED might just be moved along if proving troublesome.

Commenting on the wealth business in the UK at the moment, Robertson says: “I think running through it IFAs have never been busier as RDR did squeeze out a lot of poor advisers. There are also a lot of people approaching retirement so good advisers are incredibly busy and they are facing some headwinds as markets won’t stay up for ever and the cost of regulation makes it difficult to be profitable. There is also a big squeeze on professional indemnity insurance and a hardening of premiums going on.”

Robertson also feels that while there are good new younger people coming into the industry, there are not enough of them. Asked if the IFA or wealth manager is being well served by the asset management industry, Robertson says: “We may have reached a tipping point for active managers. Good active managers will attract assets but look at the seismic change in the US from active to passive and you can see it is beginning to catch on here.

“If you look at the Woodford situation, are advisers confident enough in the robustness of their due diligence and the probity of the activities of the fund managers within their mandate or would they prefer to take a less risky asset due diligence route and go passive.”

Taking a passive investment strategy is an active decision, Robertson says and for good thoughtful advisers, it’s not an active or passive decision, not binary, but a blending of both and moving between cash, active and passive.”

For Robertson, the really important thing is getting the message out. He comments that if he were the marketing manager for an ETF provider, he would be concentrating his efforts on ensuring advisers were examining the ACD role and the sheer scale of due diligence required of mutual funds.

“I would be talking up the fact that with ETFs you do not need to think so hard about it and it frees up your time to spend on clients and investors, client relationships and financial planning.”


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