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Home > Investments > Discretionary Management

By Laura Suter | Published Aug 20, 2012

DFMs gain as affluent clients shun private banks pre-RDR

Bespoke DFM firms are winning business from private banks as high-net-worth clients feel they are being squeezed out in favour of wealthier clients.

Ahead of RDR many private banks are focusing on ultra-high-net-worth clients, leaving many with £1m to £3m in assets to invest out in the cold.

Andy Steel, chief executive at James Hambro & Partners, said the firm is seeing a lot of business from clients being forced into packaged products or denied truly bespoke services from big name private banks.

John Greenwood, chief executive at boutique DFM Creechurch Capital, said he gained one client from UBS, as the customer felt he was not that important to the bank.

“We are picking up business from clients who have been turned away from private banks, as part of their RDR plans. If you have £3m and go into a private bank you would expect to feel important, and they do not,” he said.

Steel added that he thinks the stream of business from private banks will continue post-RDR as clients review their arrangements and realise they are not getting the service they deserve.

But just how sustainable this approach is remains to be seen, as while they provide lucrative business, there are fewer ultra-high-net-worth clients.

“I don’t think there is enough business to sustain this business model, as there is a lot of competition for the ultra-high-net-worth,” Greenwood said. “Some private banks have grown so big now that there is no real thought of the client at the end.”

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