Keystone Private Wealth -Independence, what is it and what is it worth?

For those of you that have read my previous missives on the topic of wealth management, you will know that I am not afraid to present strong opinions and challenge what may be accepted as normal within the industry. To some, I am providing stimulating thought leadership, to others, I am simply tilting at windmills, either way, I am enjoying the process.

The topic for this newsletter, independence – a noun, freedom from control, influence, support or aid. It is something that can be experienced at an individual level such as when you first move out of home and are responsible for yourself (no more magic washing basket) right through to nation-states breaking free of imperialistic rule and establishing autonomous government (the fall of the British Empire, the Soviet Union to name just 2 recent examples).

As a business, especially those in financial asset and wealth management services, independence is often viewed through the lens of affiliations, group memberships, ownership, referral fees and commissions, both disclosed and undisclosed. It is often the lack of independence that is highlighted as a flaw, rather than the positive attribute of being independent.

An organisation that is defined by something that it is (independent) must surely have significantly more to offer than one that is defined by something that it isn’t?

Enough philosophy let’s move on to the practicality.

The world of family office wealth management is complex and subject to a multitude of influences. In its simplest form, a wealth management framework may include the following decision matrix

  • Capital Allocation
  • Risk appetite
  • Return expectation
  • Liquidity needs
  • Asset allocation
  • Direct or indirect investment
  • Manager selection
  • Fee negotiation
  • Reporting framework

Standard asset allocation, model portfolios, approved product lists, platforms and funds under management (FUM) based fee structures simply do not (and cannot) address the client-specific vagaries of such a decision matrix.

There is no one size fits all solution. It is highly unlikely that any one financial services organisation would be able to meet all of the cash, fixed income, equities, property and alternatives needs, let alone provide the best solution in each asset class.

It is worth noting that even simply discussing the above, I have fallen into the trap of discussing what others are not, rather than what Keystone Private Wealth is!

What is independence to Keystone Private Wealth?

  • Retainer based fees, no referrals, no commissions
  • Access to best of breed market participants in all asset classes
  • Reduced transaction costs to our clients
  • Deal flow, not just from the usual market sources but also other family offices, our clients and industry contacts
  • Comparative reporting, we can compare your portfolios (regardless of who manages them) to other real-life, active portfolios (not just benchmarks) at a portfolio, asset class, manager or individual investment level

So back to the heading for this article, I think I have gone a long way to describing what independence is (and isn’t), so to the other part of the question, what is it worth.

From a quantitative standpoint, clients should see the following benefits of using independent wealth managers:

  • Access to best of breed managers and improved returns
  • Transparent fee structures and reduced costs
  • Better deal flow

From a qualitative perspective – feelings of trust, integrity and confidence that it is their best interests that are being served.

By David Jackson