But for Alan Higgins, UK chief investment officer at Coutts, the future is about building a broader range of clients and using very modern investment methods.
The wealth management arm has £30bn of assets under management. Higgins, who has been chief investment officer since 2009, says there are three distinct client segments, and the portfolios housed within the wealth management division reflect those different client types.
The client book can roughly be divided into: very high-net-worth clients who have a portfolio that includes both funds and direct equities; clients within the company's multi-asset fund range; and those who use the robo-advice offering from the company.
Coutts is owned by NatWest Group, and has 12.5m clients across the whole of NatWest Group.
The first nod to modernity from the historic bank is the extensive use of passive funds.
Higgins says: “We are big proponents of passive investment strategies, cost is of course part of the reason for that, but also we think passives are effective at giving clients most of what they need.
"We also do use some active in portfolios, and for the very high-net-worth clients we buy direct equities. But we don’t do very much of the latter, because we know how hard it is to add an alpha with those, so we only have small allocations.
"The guys who buy direct global equities for us, we might give them, say, 3 per cent of the portfolio, and then they buy lots of equities, so the exposure is quite small. I really think it’s an area where you have to be quite humble.”
That product range encompasses three multi-asset portfolios and a discretionary fund management offering.
The second way the business has embraced the new world is via its Personal Portfolio Funds range, which is aimed at beginner investors and which Higgins describes as “our Nutmeg competitor".
The Personal Portfolio Funds range has assets of £1bn, with about 70 per cent of the clients coming in via the NatWest retail bank, where they are customers.
He says the idea of investing using a mobile phone is “catching on”, but that his company insists that clients commit to a five-year time horizon and says the product is only for “the most insistent” clients.
Higgins acknowledged that the robo-advice market is a “difficult place to get clients,” with even very large companies such as UBS and Investec deciding to close their respective robo-advice businesses.
He says: “We find that lots of different types of individuals want to use the Personal Portfolio Funds service. You get clients with a relatively small amount of funds to invest, but we find there are also people who are very high-net-worth individuals who just want to use passive funds, [and] who feel they only need passive funds.”
All of the various products offered are run via the same “centralised” investment process and team, which is headed by Higgins. He says he prefers to select funds managed by companies that are owner managed, such companies are often boutiques.
He says such businesses are typically run with a longer-term view in mind, and while some boutique companies may have slightly higher fees, he notes clients typically have no objection to paying slightly higher fees if the performance is higher.
He adds: “Empirically, the number of active funds in the UK market looks crazy, but then when Funsdmith was launched people may have said Terry Smith was crazy, and look where he is now.”
Higgins says that part of his job is to be “willing to fail unconventionally” as he searches for investments that may work and that are not always offered by rival providers of discretionary fund management or model portfolio services.
Some of the esoteric investments he has bought in recent years include Russian equities and Italian government bonds.
This keenness for alternative assets reflects the experience Higgins has had in his career, having been head of global fixed income at ABN Amro Asset Management and an executive director at Morgan Stanley.
The third way in which Coutts has embraced modernity is in its relationship with the technology-driven and comparatively modern US behemoth BlackRock.
The partnership involves the creation of six new funds run by BlackRock, but exclusively available to clients of Coutts. There are three active and three passive funds in the range, with Coutts setting the asset allocation for each fund.
The company says that by creating these bespoke funds, known in the industry as segregated mandates, fees will be lower over the long-term for clients.
The active funds in the range are US equities, UK equities and global investment grade credit, while the passive funds are US equities, UK equities and Europe ex-UK equities.
Higgins is a long-term fan of using such mandates, saying in addition to the cost advantages, the technology and risk management can be centralised by Coutts. With large blocks of capital, such as in those mainstream asset classes, he wants more control than would be the case for smaller blocks of capital.
David Thorpe is special projects editor of FTAdviser
