Advice firm launches model portfolio service

Advice firm launches model portfolio service

The directors of advice firm Lathe & Co have set up a discretionary fund management service for both their in-house advisers and external firms.

Nother Portfolio Services has gained regulatory permissions to manage client portfolios on a discretionary basis, allowing clients benefit from "real-time investment management".

The firm will offer five risk rated investment solutions: conservative, balanced, moderate, dynamic and adventurous, with the option of an ESG tilt. 

Lathe & Co advised clients will be charged 0.12 per cent per annum, on top of advice fees of 0.5-0.75 per cent, while the service will be made available to the wider market at a fee of 0.30 per cent per annum. It will not charge VAT.

Nother's conservative portfolios will consist of 20 per cent equities, 25 per cent liquid alternatives and 55 per cent fixed income and target a return of 3.9 per cent, net of fund management fees but gross of advice and platform fees, according to its key features document. 

Its adventurous offering at the other end of the spectrum, will consist of 100 per cent equities and will target a return of 6.1 per cent.  

Lathe & Co has worked with Redington to create both its current portfolios, which started in 2019, and its model portfolios. It currently has an exclusivity deal with the institutional investment consultancy firm for the next three years.

Haydn Brooks, director at Lathe & Co, said: "Redington ... deals with big ticket clients that have £5-6bn in assets under advice.

"Lathe & Co only have £400m so we're a minnow in comparison to the rest of their clients, but we get exposure to the same investments.

"So we get exposure to institutional funds which retail investors just can't buy and we also get it at discounted share prices."

"We've got an exclusivity deal with Redington for the next three years, so we've decided to take the recommendations from Redington and create model portfolios."

He added: "From what we've noticed institutional just seems to be performing better than retail funds. So, we'd like to try and bring that institutional scale, institutional breadth of research and investment to the retail space."

Nother Portfolio Services will have the discretion to make adjustments to the client's portfolio such as integrating new fund additions, removing underperforming holdings, or targeted rebalancing.

It envisages having to rebalance at the earlier of a 10 per cent holding drift or on an annual basis. 

According to Lathe & Co, only a minority of advice firms hold discretionary permissions due to the extra administrative burden of holding the license.

In August Adviser Services Holdings (ASHL), the network which acquired the Sense and Lyncombe networks, set up an investment arm to provide its advisers with a range of “competitively priced” portfolios. 

Last month (September), two former J.P. Morgan wealth specialists set up an investment management firm with a DFM service for advisers.

This came after Hymans Robertson Investment Services moved to boost its presence in the adviser space with its own ‘tailored portfolio service’.