Over the last few years there has been a growth in segmentation within the wealth management sector, with firms such as RBC Wealth Management, Brown Shipley and Investec Wealth & Investment leading the way in organising clients using a structured methodology.
Some financial planning clients need differentiation within the wealth sector. For example, sports personalities have a peculiar income and investment regime that means they need a different advisory approach compared to an everyday wealthy client.
There have been debates within the industry about this topic for standard advice. But can this work for cross-border wealth management? International Adviser asked several advisory firms for their thoughts…
London & Capital
Adam Myers, associate director at London & Capital, said: “We sit down with clients to establish what their requirements are – if its long-term growth, income, assets. Then we look at the structures that they have – and we can manage an account in a variety of different ways and be as flexible as the client needs it to be.
“In an industry like ours, we don’t want to pigeonhole people into different boxes, we don’t want to force them down a certain route. My role is to understand their long-term strategy and create something that matches that.
“From the investment standpoint, at this moment in time with volatility, we look at assets rather than taking too many risks with client portfolios. We can buy assets in multiple currencies, which can give clients added flexibility.
“For sports clients – I have worked with sports people who come from the US and have lived across Europe – it is very important to have a portfolio that is diversified across currencies. Getting a good understanding of a client then creating a strategy is a good approach, rather than putting square pegs into round holes.”
Stonehage Fleming
Johan van Niekerk, partner – head of family office, Neuchâtel – Stonehage Fleming, said: “Some form of client segmentation is necessary when considering cross-border wealth planning.
“However, it is not as simple as you would think. We have several fixed offerings, but the way we combine them is tailored to meet the specific needs of the clients.
“Our services have two clear objectives: the successful protection of family wealth and the successful management of family assets.
“The needs of a professional athlete, who accumulates wealth during a career (which might be shorter than that of an entrepreneur) differs from the needs of an entrepreneur who might have one or several significant liquidity events during her/his lifetime.
“Because the needs of our families are so diverse, segmentation becomes challenging but not impossible. As an example, we have a dedicated team that look after professional athletes.”
Lombard International
Simon Gorbutt, director of wealth structuring solutions at Lombard International Assurance, said: “Every client is unique, and you can categorise [them].
“Sports people, for example, tend to make money quite early on in their careers. They might be making a lot of money at a time where there might be a lack of advice and guidance on how to manage that.
“There are a lot of statistics around on the number of professional sportspeople who are bankrupt within five years of retirement.
“I think one of the reasons for that is the lack of advice or the lack of good advice. There is always the risk that they will be preyed on and, of course, they are very mobile.
“We do work with sportspeople and sometimes it is a question of them taking some advice and saying a portion of what is earned is set aside in a life assurance contract as a nest egg. And if they are signed by a team abroad, they can have the peace of mind that they can take that investment with them and it will continue to work with them abroad.
“For business owners, it is another set of guidelines. They might be savvier when it comes to investments, they might want greater control at every level of the solution – control over the wealth itself, how it is managed.
“They tend to be quite demanding in that respect. They are relatively mobile, and they might want to use whatever structure as part of their overall wealth plan in order to put further investments into businesses that they run. That has got another layer of complexity.”
Old Mutual International
Karen Blatchford, head of international proposition at Old Mutual International, part of Quilter, said: “As advisers transition their businesses in an evolving international advice landscape, client segmentation is becoming critically important. Firstly, it is good business sense, particularly when moving to recurring fee models.
“Thorough segmentation and analysis of client databases will enable firms to ascertain the profitability of different client segments to ensure they are commercially viable to serve.
“But it also allows you to ensure you are serving specific client needs. This is important not only from a regulatory standpoint, but even more importantly it helps to ensure you are delivering good client outcomes.
“By defining target clients, you can gain a deeper understanding of their behaviours and desires, find opportunities to improve their experience and keep them coming back to you for more.
“It enables you to pinpoint the groups that will be most profitable and makes your efforts more measurable.”
Howard Kennedy
Simon Malkiel, partner at law firm Howard Kennedy, added: “From a legal perspective, international tax and succession planning advice needs to be tailored to the individual needs of the client. Distinct approaches may be needed for clients from different professions, backgrounds and nationalities.
“Often the ultimate objective will be the same – structuring the client’s affairs for maximum asset protection and tax efficiency, with a robust succession planning strategy. But the means of achieving it, and how the advice is communicated to the client, can be quite different.
“There are a wide range of different legal dilemmas for clients to grapple with: tax planning, succession planning and thinking creatively when it comes to conflict of laws.
“Advisers have to be solutions focused and actively engage in creativity, in order to serve clients whose assets are located across borders.”
