Some clients work very hard for many years and create businesses that they later sell for large sums of money. We work with several clients that fall into this category.
It’s easy to assume that these very hard-working and intelligent people are all money experts, but that’s a common mistake that is often made. They are experts in their fields, and it’s not from investing. They understand more than most the need to pay for experts in other fields, and so they use accountants and of course Independent Financial Advisers to cover their complex financial positions.
We recently had a client who invested in one of the top firms in the UK for the past five years. One of the issues these clients can have is that they’re invested in things that they don’t really understand and that they get lumped together in Discretionary Investment Funds. These can be good for the adviser, especially if the adviser never changes the firm for many years, however it’s not so good if the performance is hard to measure and poor.
This client told me they have experienced no growth in the past five years but have paid £100k a year in fees for the service. After looking at his investments we found that the advisory firm placed him in a discretionary fund that they had borrowed £1 million pounds to set up, creating a conflict of interest the client knew nothing about. This had led to what the client saw to be poor performance and an approach to his money that he really didn’t like, so he moved his considerable assets to us. In less than a year, and by investing in our bespoke service, he told me he’s made more money in 8 months than in the past five years, and our fees are dramatically lower than what he was paying.
Trust is the most important factor when choosing a financial advisor, the needs of the clients should come first, not the profits of the firm, they will make good money over the long term anyway. The advantages of being a small family firm give us the edge of how we invest our client’s money and give us the flexibility that large national firms cannot deliver.
