Simon Lough has taken the helm of UK-based Heartwood Wealth at a time when economic conditions have turned sour but, as WealthBriefing found out recently, he is not a man to be easily rattled.

Earlier this week, Heartwood, which has £1 billion of assets under management, announced that Mr Lough is taking over as chief executive from his brother, David. The change, which had been decided about six months ago, was not connected to the current market turmoil, Mr Lough said.

Smaller wealth managers, precisely because they are often not part of a large banking group suffering from credit losses, can be better placed to cope with a chillier economic climate. “We have definitely seen in the last year disillusioned clients with the product-selling mentality of big banks," Mr Lough told WealthBriefing.

He did not envisage radical changes in investment policy. There had been a growing skepticism at Heartwood towards market performance since early last year, he said, pointing out that "we started to take defensive action May of last year .... we have been cautious".

After some uncertainty, there had been a significant attitude shift in October in terms of asset allocation. Heartwood has been moving into cash products, encouraged by the UK Government’s cash guarantees for depositors.  Though the Government has so far only promised to protect £50,000 per account per person, Heartwood is convinced that the Government has put out enough signals for cash to remain a stable holding in times of wealth preservation.

Mr Lough said he would not channel clients’ money to foreign-based bank accounts with government guarantees, as it was unclear whether UK-based clients can expect protection. Recently, the plight of  UK savers in Icelandic banks registered in The Channel Islands has highlighted the risks that some depositors can be left out of pocket.

Mr Lough, who works with a total of 90 employees at Heartwood, warned that the economic downturn could last up to eighteen months. He remained, however, upbeat. Controlled investment with sensible exposure to risk could end up profitable in the long-term, he said, stressing that “wealth preservation is people’s core concern”.

Currently Heartwood mainly acquires clients through personal referrals, Mr Lough said that the firm is looking at developing other client acquisition strategies.