Results from WH Ireland published this week showed the fee income for the wealth management division represents 85 per cent of the wealth management division’s income, which has GBP1.6 billion of assets under management, of which GBP1.02 billion are under discretionary management.
The wealth management division’s revenue was up 19 per cent to GBP15.8 million, reflecting a significant increase in management fees and wealth planning, including the first full year of contribution from WH Ireland’s latest acquisition, Harpsden, and despite a fall in commission income.
Michael Bishop, Head of Wealth Management, WH Ireland joined the firm in February this year, from UBS, where he was head of the family office and ultra-high-net worth business for northern Europe.
He says there are similarities between his past rather more institutional experience and the new one. “They both had wealth management and capital market businesses and how they collaborate is important and key,” he says.
Of this year’s results, Bishop describes them as solid. “They show the focus that we have placed on the business getting to the point where we can grow efficiently,” he says. Harpsden and its strong culture of financial planning, rather than investment management, has brought something new to the table and provided solid growth, Bishop says.
He describes financial planners as taking a broader overview of a family, asking them questions about their long-term goals and will incorporate and structure things so that all opportunities are recognised and fulfilled.
Investment managers, on the other hand, are focused on markets and investment portfolios and trying to add value, he says.
“The best way is for a financial planner to meet the clients so that the structure is in place for a long period and then the investment manager comes in, with our chief investment office, and starts making sure that the individual compartments of the portfolio are met.”
The chief investment office model has been built out at WH Ireland so that clients are not necessarily in the hands of an individual but in the hands of an investment philosophy, Bishop says.
WH Ireland’s chief investment office has a budget for institutional research which allows it to come up with forecasts and ideas at the macro-economic level.
“Our external research allows us to be properly informed and then we can create transactional trading ideas,” Bishop says.
“What we are seeking here is to provide the combination of the financial planning approach along with the institutional investment ideas you would expect from a much larger house.
“The investment philosophy is that you invest better if you invest for the long term.”
Bishop has joined WH Ireland at a period of transition from one economic cycle of super low interest rates to a more normalised interest rate environment.
“That requires high quality client communication and also the ability to put the brakes on if markets are falling, as they have during this year, in both equities and bonds.”
WH Ireland is still looking out for acquisition opportunities but Bishop observes that the price of wealth management businesses has gone up in the last year.
“Our view is that the culture is very important. When you merge the cultures and you have the financial planners and investment managers working together, you add value.
“But you can buy the wrong business and so we are focused on the cultural fit for WH Ireland.”
Bishop notes that for clients the most dominant concern is the cost of living rise.
“Everyone can see not it is not solely related to Russia’s invasion of Ukraine and central governments and banks can do more to control inflation,” he says. “We don’t expect the worries of 9 per cent inflation to persist for long and these numbers will come down and as a result interest rates won’t go up as far as people think.”
This calendar year will remain difficult, he believes, but looking forward he sees a future not filled with the gloom and doom that is currently being talked about.
In terms of investment styles, ESG dominates, particularly for younger clients and the firm is going through a communication process with clients discussing their ESG needs. Bishop notes that retired clients, dependent on income producing investments, struggle with ESG, as not much of it is income producing, as yet.
“There is no question that ESG is here to stay and it’s important that the investment community globally starts to understand proper sustainability and ESG metrics,” Bishop says. “The investment world needs uniformity.”
The firm is also increasing its use of ETFs, filling in asset class exposure where they can’t find an active management solution, and offering a pure ETF model for clients.
“Research shows that most long-term value comes from asset allocation and not manager selection and ETFs reflect that,” he says.
Bishop concludes by expressing his delight at his new role at WH Ireland, which he describes as: “A genuinely client-centric organisation.”