Despite rising costs, margin compression and substantial consolidation in the wealth management sector, in 2015 a handful of brave and entrepreneurial senior executives at Barclays Wealth, which at the time was going through a ‘strategic overhaul’ of its wealth business, decided to start an independent financial advisory firm in London, dedicated to serving ultra-wealthy clients.
The new wealth management partnership has gathered more than £1.5bn ($2bn) in assets under management and advisory, since it fully launched to clients in 2017. It employs 45 people, based in sleek Mayfair offices.
“The UK is a very fragmented market, with lots of universal banks, boutique wealth managers, pure play investment managers and multi-family offices,” explains Tanvi Davda, managing partner and head of clients at Saranac. “Yet, we felt there was an opportunity to create a firm that had the breadth of offering you would find in large universal banks, but with a fiduciary ethos, very tailored to meet client needs,” she says, adding that UHNW clients, with more than £10m to invest, generally seek bespoke, unconventional solutions for their financial and non-financial needs.
Having a clear business proposition, and starting from scratch, with full sight of the regulatory framework, has enabled the firm to build systems, infrastructure and processes in a cost-efficient way, adds Ms Davda, avoiding diseconomies of scale associated with supporting legacy systems typical of large institutions.
“This is one of the beauties of designing a business from a blank sheet of paper,” she says.
The firm, which has raised almost £60m of capital to support its growth ambitions, with Standard Life Aberdeen a key investor, made investing in its own infrastructure a priority.
“We designed all the workflows of our front office platform with the client in mind,” says Ms Davda, explaining the platform is run and maintained by a third-party. Technology should be an enabler to client advisers, and support the compliance framework in which wealth managers operate, she adds. But the business was built on the assumption that the complex end of the UHNW market is, and will remain, a “highly personal” business.
While clients are not able to transact online, a reporting app offers them a total picture of their wealth, including financial and non-financial assets also managed by third parties, and access to real time performance and valuation.
The UK firm, which aims to grow assets to £10bn within 10 years, positions itself as an aggregator, or “integrator”, as it partners with several other firms to deliver to clients a range of capabilities. These range from portfolio management and advisory investment management, to wealth structuring and financing, also covering sourcing and advising on private capital opportunities.
Intermediaries – such as lawyers, tax advisers, accountants and trustees – are selected through beauty parades and are themselves “a rich source” of new clients. These, both UK-based and international, are sourced primarily through the firm’s client advisers’ and clients’ network.
Advisory investment management is where the firm has seen the greatest demand. MiFid II has increased the regulatory burden to serving clients in this space, leading many wealth managers to move away from it, towards the discretionary space.
For a big organisation, it is very hard to provide the oversight, infrastructure and support needed to cover many advisers and a wide and diverse client base, claims Ms Davda. “We seek to offer a high touch service, and advisory is an area in which we have seen real growth from our clients. We are able to be more nimble, because we are looking after a small, more homogenous group of people. Here the size is advantageous for us.”
