Equities  

‘Investors are looking for reassurance that fund research is independent’

Having graduated from the University of Birmingham in 1994 with a degree in chemistry, Darius McDermott worked in a number of part-time jobs before joining Chelsea Financial Services’ operations department at the beginning of 1996, to commence his “one and only proper job”.

After three years spent on this administrative side in each of the firm’s main departments – personal equity plans, unit trusts, and pensions – and in the midst of a ceaseless bull market, he was appointed investment manager across all three departments, and a year later managing director of the firm.

“At the time I became managing director, the FTSE 100 was still in unrelenting bull mode, but soon after, of course, we entered a prolonged and deep bear market, which threw up new challenges, and the need to adapt, of course.”

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This need to alter with changing times, lay behind Chelsea Financial Services’ adoption of new platform technology, ahead of many other competitor firms, with Mr McDermott overseeing the migration of client assets to the new medium.

“This was a real sea-change for us, and we were one of the very first brokers to push the re-registration of client assets in this way.”

At the same time, he ensured that the firm pushed hard on upping its profile to the public in general, and to potential and existing clients in particular, by talking directly to the press, and by increasing the communications resources used by the firm.

Part of this broadening out of Chelsea Financial Services’ profile was the building up of the research side of its website, which now not just covers the key products that Chelsea Financial Services can offer at discounted rates, but also highlights any funds that the firm believes have been performing consistently poorly, and which clients may wish to switch or transfer (these are detailed in the website’s “relegation zone”).

This drive to subtly re-shape the firm on an ongoing basis and to diversify its operational scope lies behind Chelsea Financial Services’ plans to launch an independent fund ratings agency and research centre – FundCalibre – early in the new year, in a joint venture with Albemarle Street Partners.

He said: “We know from our own experience that investors need help to narrow down fund choices and are seeking guidance to help make their investment decisions.

“Increasingly, investors of all types are looking for reassurance that fund research is independent and not biased in any way, and FundCalibre will be an invaluable web-based tool for these people.”

Indeed, subject to approval by the FCA, the ratings website will launch at a time when other ratings agencies’ operations have come under considerable criticism.

Most notably, in this context, the big three agencies (Standard & Poor’s, Moody’s, and Fitch) that rate the risk associated with various securities, from national to company-specific, have come under negative scrutiny for their ‘issuer pays’ model, in which a security’s issuer pays the rating agencies for the initial rating and ongoing ratings of a security, thereby raising conflict of interest issues.