Success at last

After a month or two of negotiations with one of our preferred private banks, we have achieved what can only be described as an excellent result for our clients – an extremely competitive fee schedule.

Indeed, it is so competitive I believe it will provide us with an immediate edge over most private banks and our peers.

By way of example, while it is fairly typical for a private bank to charge up to 2% in ‘preliminary fees’ for an allocation to a fund, we can now do the same at less than 0.2% (for a 250k UCITS allocation). The client still benefits from the bank acting as custodian.

Similarly, due to our open platform, we are able to select funds with low fees and avoid those with ‘trailer fees’. These can be as high as 0.60%. These are usually included in the management fee and are often, it must be said, charged without the client being fully aware of them.

Cutting these high transaction fees can represent a significant savings to most clients.

For example, a client with a USD10m portfolio invested in funds, could unknowingly pay up to USD200,000 in fees each and every year.  Of course, the more savvy investor may negotiate to reduce these fees, but it’s likely, even with special concessions, that they will remain more than USD100,000 or 1% of the portfolio’s value; excessive, but for clients with between USD10-50m of liquidity to invest, it is very common. They are not large enough to negotiate for institutional fees and are usually not well enough versed in the market to be able to negotiate effectively.

This is where we can help. In the above example, getting transaction costs down to 0.2% could potentially represent a saving of USD80,000 or more.

While maintaining the client’s current relationship, we can ensure the client has the best deal or is at least made aware of alternatives. Whether that be on lower transaction fees, lower costs of leverage, or simply better access to product. That’s our job and the banks respect that.

While reducing fees has been an important milestone, another key requirement in selecting banks with whom we will work is that they have an open platform. By this, they should have access to all funds, whether individual securities, mutual funds, UCITS or offshore funds.

Our newly appointed bank not only offers very attractive fees, but also comes with an ‘open platform’ and all the other key requirements we had (one of the highest credit ratings at AA-, a solvency ratio well above its peers, a global footprint and excellent custodial and reporting infrastructure).

This ‘open platform’ gives us the flexibility to research and advocate the most attractive funds, many of which are not be available on other platforms. In today’s market where most asset classes are looking increasingly expensive and future returns may be somewhat muted, it’s important for asset managers to look at alternative asset classes where idiosyncratic alpha can be generated with less reliance on beta, or the underlying market.

Having spent the last few months working with various service providers researching a significant number of funds, across both the mutual, UCITS (Undertakings for Collective Investments in Transferable Securities) , private equity and offshore fund space, we feel that we now have an excellent offering, one that pushes a portfolio closer to capturing the greatest upside for a predefined risk level and with limited market correlation. Many other players in the market simply don’t have access.

If you want to learn more, or simply want a second opinion, feel free to reach out to us. Always happy to help.