Investments  

Coutts CIO on building a £30bn wealth management business

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