QUILTER CHEVIOT WEALTH MANAGEMENT, OR LACK OF?

Albermarle

Fatinvestor said:

Thanks for your feedback to date.

I understand that their portfolios are benchmarked again something called the PIMFA Pivate Investor Balanced Index. Whilst that index has dropped by around 5-6% this year my friends' high value portfolios have dropped by more than 10% this year, as already mentioned that seems about right for a typical medium risk portfolio. and did not do well against the PIMFA benchmark in the last quarter of 2021. They keep getting pro forma letters (which I understand are a regulatory requirement) informing them that their portfolio values have recently fallen by 10% plus. When they ask what's going on they are told to think long term and that their has been a lot of volatility in some funds which focus on American tech stocks, inc several firms on the NASDAQ market. Since when have Nasdaq Tech stocks been considered to be medium risk as I thought they are notoriously volatile. If they were invested 100% in Nasdaq tech stocks that would be seen as higher risk. However almost everybody's portfolio holds significant % of Apple, Microsoft, Alpabet etc as they are some of the biggest companies in the world. By not having any exposure to this sector would have meant a lot of missed growth over the last few years.

One friend complained and was given the standard 'complaint not upheld' response. They will know go to the Ombudsman. Almost certainly a waste of time.

I am looking at investing say one quarter of a million £'s with a decent wealth management firm and i'd hope they can do a better job than me and my husband can do in picking stocks and bonds. I was thinking of Quliter Cheviot, but have been put off by my friends' experiences. I could turn to a financial adviser but all they seem to be full of promises that can't be fulfilled. Have any forum members any recommendations which we could look into? 

 IFA's/wealth management companies would not be looking at picking individual stocks or bonds . Portfolios will be diversified over many shares/bonds/sectors/risk level/countries. Also they would look at your whole situation, such as tax planning, inheritance, pensions etc - the investment part is only one part.
If you are not happy with it, why not do some research and invest yourself. It's not rocket science but does need some attention, and you save the hefty wealth management fees !

dunstonh

I understand that their portfolios are benchmarked again something called the PIMFA Pivate Investor Balanced Index. Whilst that index has dropped by around 5-6% this year my friends' high value portfolios have dropped by more than 10% this year, and did not do well against the PIMFA benchmark in the last quarter of 2021. 

Nothing wrong with that.  An economic cycle is around 10-15 years typically.  In that period, the will be quarters of underperformance and overperformance relative to a comparable benchmark.   The markets are going through a cycle change at the moment and this is what happens.

 They keep getting pro forma letters (which I understand are a regulatory requirement) informing them that their portfolio values have recently fallen by 10% plus.

It is not a requirement with an advisory portfolio but it is with a discretionary portfolio.

One friend complained and was given the standard 'complaint not upheld' response. They will know go to the Ombudsman. 

That is because there is nothing to complain about.     It also sounds from your other comments that no advisers were used. So, if the investment was bought without advice, you cannot complain about the decision to buy that investment.  It sounds like this person really needs advice.

I am looking at investing say one quarter of a million £'s with a decent wealth management firm and i'd hope they can do a better job than me and my husband can do in picking stocks and bonds. I was thinking of Quliter Cheviot, but have been put off by my friends' experiences. I could turn to a financial adviser but all they seem to be full of promises that can't be fulfilled. Have any forum members any recommendations which we could look into? 

You seem confused and an adviser would put you right.   Not give you promises that cannot be fulfilled.   

Also, you shouldn't use wealth management companies or FAs.  You should stick to IFAs if you need advice.  

bostonerimus

The problem with using a "wealth manager", or any investment advisor, is that you are giving control of your money over to someone else and that the investor often does not fully understand how their money is invested. It's easy to ignore that when your investments are growing, but as soon as you lose money then people start to second guess their choice of advisor without the necessary understanding of their investment portfolio. Right now world stock markets are going through big corrections as inflation rises and growth slows down because of a confluence of political and economic troubles. Most people are seeing the value of their pension pots and investments drop, so what will your friends do? Where would they move their money? This is a common problem for people who have not accepted the reality of the downside risk they are taking using volatile investments to fund pensions. Me, I DIY so I only have myself to blame as I see the value of my pension pot fall, but I understand my strategy and do not rely on volatile investments for my retirement income, so I can be sanguine as the markets crash. The problem your friends have is that they are not prepared for volatility and they are sufficiently divorced from the investment "coal face" to be unable to distinguish between advisor stupidity and inherent market volatility that will work itself out.

dunstonh

This is a common problem for people who have not accepted the reality of the downside risk they are taking using volatile investments to fund pensions. 

Although if the OP's friends had used an adviser, they would have had the opportunity to match the investments to their risk profile (which includes knowledge and understanding and potential behaviour as well as capacity for loss).    Most advisers would also help the investor learn what can happen with the investments in good and bad periods so it is not a shock when a negative period occurs.  

Me, I DIY so I only have myself to blame as I see the value of my pension pot fall,

They went DIY on their choice of investments as well.  Not at the fund level but the choice to bypass an adviser and picked a DFM off the shelf when they clearly didn't know what they were doing.    So, they went DIY but are now blaming the investment manager.

re sufficiently divorced from the investment "coal face" to be unable to distinguish between advisor stupidity and inherent market volatility that will work itself out.

There appears to be no adviser.  Quilter Cheviot are not advisers but a DFM (effectively a fund manager). They are available to use without an adviser and that appears to be what has happened based on the information posted so far.   

bostonerimus

dunstonh said:

This is a common problem for people who have not accepted the reality of the downside risk they are taking using volatile investments to fund pensions. 

Although if the OP's friends had used an adviser, they would have had the opportunity to match the investments to their risk profile (which includes knowledge and understanding and potential behaviour as well as capacity for loss).    Most advisers would also help the investor learn what can happen with the investments in good and bad periods so it is not a shock when a negative period occurs.  

Me, I DIY so I only have myself to blame as I see the value of my pension pot fall,

They went DIY on their choice of investments as well.  Not at the fund level but the choice to bypass an adviser and picked a DFM off the shelf when they clearly didn't know what they were doing.    So, they went DIY but are now blaming the investment manager.

re sufficiently divorced from the investment "coal face" to be unable to distinguish between advisor stupidity and inherent market volatility that will work itself out.

There appears to be no adviser.  Quilter Cheviot are not advisers but a DFM (effectively a fund manager). They are available to use without an adviser and that appears to be what has happened based on the information posted so far.   

I had assumed they were getting some advice on portfolio construction and management as I saw that they have a "Discretionary Service" that includes active management of a portfolio. If they are just using the "bespoke funds" to create their own portfolio then there is a smaller pool of people to "blame". I was once told to avoid the conditional tense and words like could, would, and should in connection with investing results. It's what you actually do that matters, however, when people lose money they see it as a failure and often take it too personally and so look for others to blame.

dunstonh

I had assumed they were getting some advice on portfolio construction and management as I saw that they have a "Discretionary Service" that includes active management of a portfolion

The DFM offers a selection of portfolios (think of it like a managed fund of funds in some cases or fund manager pickings stocks/gilts).  They do not provide personised advice.     DFMs tend to produce more glossy information about their portfolios' investments but do not provide advice.      

I don't like DFM services in general as it adds a layer of charges for little or no reason (on the whole DFM portfolios do no better than the main multi-asset funds).   However, they can add value for those with an ESG requirement but that is about as far as I would go with a DFM.

bostonerimus

OP, if the poorly performing funds are index trackers and they are significantly below their benchmark, then you have reason to be annoyed and I think a regulator might want to look at what's going on. However, if these funds are actively managed then you have just invested in one of the many bad active funds. There are plenty of them around.

As far as recommendations I'll tell you what I do. I avoid DFMs etc and use low cost platforms and DIY using low cost index trackers. I have diversified my retirement income using a rental property and a defined benefit pension and paid off the mortgages before I retired to reduce the income I need. This insulates my day to day income from stock market volatility.

Fatinvestor

Hi again. 

As an update I spoke with a couple of my friends and they informed me of the following:

Apparently the benchmark indices used by Quilter for my friends portfolios are 1) The MSCI PIMFA Private Investor Growth and 2) The MSCI PIMFA Private Investor Balanced. Over a 5 year period Quliter are now underperforming compared to those benchmarks on both a gross and net (of fees) basis. In my book that is underperforming. Yes, investment portfolios rise and fall, but what my friends are upset about is Quliter long term relative under performance. They are not a witchhunt; they just want to hold quilter to account as they respond to complaints with a whole host of selective vague responses, but then accept no responsibility for any under performance. 

Post Quliter not upholding any of my friends' complaints can they then turn to the Financial Ombudsman? Two friends used to have an Independent Financial Adviser but got rid of her and decided to deal with Quilter directly as it was a bit cheaper to do so. Mind you, Quliter never advised them that they would be better off finding a new IFA.

eskbanker

Fatinvestor said:

As an update I spoke with a couple of my friends and they informed me of the following:

Apparently the benchmark indices used by Quilter for my friends portfolios are 1) The MSCI PIMFA Private Investor Growth and 2) The MSCI PIMFA Private Investor Balanced. Over a 5 year period Quliter are now underperforming compared to those benchmarks on both a gross and net (of fees) basis. In my book that is underperforming. Yes, investment portfolios rise and fall, but what my friends are upset about is Quliter long term relative under performance. They are not a witchhunt; they just want to hold quilter to account as they respond to complaints with a whole host of selective vague responses, but then accept no responsibility for any under performance. 

Post Quliter not upholding any of my friends' complaints can they then turn to the Financial Ombudsman? Two friends used to have an Independent Financial Adviser but got rid of her and decided to deal with Quilter directly as it was a bit cheaper to do so. Mind you, Quliter never advised them that they would be better off finding a new IFA.

Anyone unhappy with the response from a formal complaint to a regulated financial organisation has the option of escalation to the ombudsman, but it's unlikely that FOS would see investment underperformance as being a valid claim - the nature of benchmarks is that some will be above them and some will be below them (they're not minimums), but that doesn't in itself mean that a complaint is justified....

dunstonh

Yes, investment portfolios rise and fall, but what my friends are upset about is Quliter long term relative under performance. 

That can happen.   Its also not something you can complain about.

They are not a witchhunt; they just want to hold quilter to account as they respond to complaints with a whole host of selective vague responses, but then accept no responsibility for any under performance. 

Even the best portfolios have periods of underperformance.    underperformance can also be relative.  For example, some portfolios do not target above benchmark returns as they aim to reduce volatility to a level below that benchmark which will inevitably result in lower returns in positive periods.  For some people, that may be what they are after.       This is why you analyse the investment portfolio before you buy it when you choose not to use an adviser.

Two friends used to have an Independent Financial Adviser but got rid of her and decided to deal with Quilter directly as it was a bit cheaper to do so. Mind you, Quliter never advised them that they would be better off finding a new IFA.

The IFA would likely have prevented all this as the job of the adviser is suitability of the investments to the investor.   If you dump the adviser and make decisions yourself you cannot later complain that those decisions were wrong.