Cazenove eyes tech improvements to aid advisers

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Cazenove eyes tech improvements to aid advisers

Valuations look fuller across a range of asset classes. Have you adjusted your asset allocation in response?

We have been favouring Europe over the US in relative terms. We will be a little underweight with emerging markets, but there has not been a huge amount of change in the past two or three months.

We have an even split between the UK and overseas – we used to have a UK bias a long time ago but that has changed.

Separately, we remain underweight fixed income. Within a medium-risk portfolio we will hold around 20 to 25 per cent, and that’s all short duration and index-linked.

What kind of alternative and derivative strategies have you been using in portfolios?

With a medium-risk portfolio we will have 50 per cent in equities, but some of that will be in participation notes. We may invest up to 5 per cent of the equity exposure to notes, which offer a combination of potential capital protection and gearing on any rise in the chosen equity market index.

We can also invest up to 5 per cent of the alternatives exposure in autocalls, which offer potential capital protection and high annual coupons (currently about 9 per cent). We will also tend to have alternatives such as hedge funds.

What are the main changes to your in-house buy list so far this year?

At the start of the year we sold the Kames High Yield Bond fund and bought the Axa US Short Duration Bond fund.

Then in April and May we rotated our US exposure, selling Heptagon Yacktman US Equity and JPMorgan US Equity. To replace them we bought JPMorgan American and Findlay Park American.

More recently, over the past two months we have sold Investec Special Situations and bought Old Mutual UK Alpha Plus. This was before the announcement about Richard Buxton taking over as chief executive at the funds arm.

With a growing number of advisers accessing DFMs via platforms, are you beginning to form relationships in this part of the market?

We are not on any external platform. In many ways our discretionary offering is its own platform. But we are aware of the developments, the trends and the growth of interest [in this area] generally.

How are you using technological advances to improve your offering to advisers?

We have discovered in the course of our research that there are two big technology providers who have cornered the market – Intelliflo and Iress. They have both approached us.

Something we have been working hard on is getting direct data feeds for our back-office systems. It would make an adviser’s life a lot easier – advisers would be able to get client portfolio information directly on a daily basis rather than ringing my team.

DFMs are coming under more pressure to make fees clearer and more competitive. How have you responded to this?

We have been very clear about all the fees we charge, even before the RDR. What the RDR has done is place more of a focus on total expense ratios, rather than just the headline rate.

We are asked far more by advisers for total expense ratios, but we will calculate our charges in whatever way the adviser wants.

What about segmentation? How important is this when dealing with adviser clients?

We don’t segregate clients by assets. I think it’s natural that if you have a £3m portfolio it’s going to have a wider range of investments than a £350,000 portfolio, but the general philosophy remains the same.

We manage money using our in-house approach, but tailored to requirements in each case.

There also may be a distinction between those clients introduced by advisers, and the clients without advisers. The latter may have a different range of financial planning requirements.

Similarly, a large client may get a different level of service to a smaller one. The minimum investment limit for those coming via an external financial adviser is £200,000.

CV

Nick Georgiadis is a portfolio director and head of the DFM team for Cazenove.

Having joined in 1981, Georgiadis is responsible for the management of all portfolios introduced via financial advisers.

He is registered with the Securities Institute and holds the CISI diploma.

Georgiadis became head of the DFM team in 2005.