Pirates in Pinstripes

The large advice companies and banks market themselves as High Net Worth advisers. They overcomplicate matters and persuade those with larger portfolios that they need "bespoke advice". Why?

The markets work in exactly the same way whether you have £20,000, £200,000 or £2,000,000. The key principles, such as getting the asset allocation right, maximising exposure to global equities, maximising contributions and minimising tax apply to ALL investors.

Pirates in pinstripes (advisers working in the high net worth market) deliberately complicate matters to give their client the impression they are receiving a "bespoke" service. But it is mostly nonsense. More often than not, they will charge large set-up fees to put their "client" in high-charging active funds, with not enough exposure to global equities and too much exposure to alternatives assets which are basically rubbish and which, after fees, produce less than bank accounts.

To add insult to injury, after marketing themselves as investment professionals, they then outsource their core service to a DFM (Discretionary Fund Manager) which adds another layer of fees to the client and even more mediocrity as their portfolios are often packed with low return or no return assets.

A portfolio with 85% or more in global equities should be achieving an average return of 10% per annum. if you are getting a lot less, you are being short-changed.

These type of outfits, with glossy brochures and smooth, well-heeled operators border on white-collar crime, in my humble opinion.

As the amounts invested are large, clients will often be pleased with the monetary amount achieved. Had they only worked out the return as a percentage of the overall portfolio, they would realise how much lost return they were leaving on the table.

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