Harry Morgan, head of private investment management at Thomas Miller Investment, explains why his firm’s new onshore offering is set to win business by aiming “straight down the middle”.

Harry Morgan, head of private investment management at Thomas Miller Investment, explains why his firm’s new onshore offering is set to win business by aiming “straight down the middle”.

It is a much bemoaned fact that wealth management firms tend to struggle to differentiate their offerings in a crowded marketplace. But making it clear “who you are” is sometimes simply a matter of making it clear who you aren’t. And that is just how Thomas Miller Investment is tackling the thorny issue of differentiation – by offering investment management services and nothing else.

Thomas Miller Investment, the asset management arm of the 127-year old Thomas Miller Group, this month officially launched an onshore private investment management offering which is emphatically only about investment management.

In an industry where firms aim to garner as much wallet share from clients as possible, Thomas Miller Investment is somewhat unusual in that it is completely eschewing the financial planning side of things in order to focus entirely on what it sees as its main area of strength.

“We don’t want to do financial planning – others can do it better,” said Morgan. Instead, the firm only wants to offer conservative, highly risk-aware investment management. This stance in fact chimes with the firm’s origins (of which more later) in the mutual insurance clubs sector and the fact that these are focused on capital preservation.

Capital preservation is king

In the words of Morgan, Thomas Miller Investment is of the view that “shooting the lights out is best left to others”. Rather, what his firm wants to deliver is investment management for clients who are “focused on capital preservation and steady growth.” Capital preservation is of course much higher on the radar of clients after the cataclysmic events stemming from the crisis, and where firms used to make much more of their stellar investment returns the phrase “capital preservation” is now much more likely to get headline billing in marketing literature.

That a typical client of Thomas Miller Investment is focused on capital preservation and steady growth ties in nicely with the firm’s roots. Thomas Miller traces its roots back to 1885, when Thomas Robson Miller joined Lamploughs to run the United Kingdom Mutual Steam Ship Protecting Association – an insurance mutual or “club” (an insurance mutual is a clubbing together of similar member organisations who pool their risks together and obtain their insurance cover at cost price).

Fast forward nearly a century spent managing assets for shipping insurance, mutual and professional services insurers and Thomas Miller’s asset management arm was launched. Thomas Miller Investment then started managing external client assets in 2004, having previously only managed the funds of its mutual insurance clubs. At this point it should be noted that Thomas Miller’s original business line remains in rude health: the firm’s clubs cover around 18 per cent of the global shipping industry and the business has an annual turnover of £85 million ($133 million). Rather, it was felt that diversifying into managing the money of non-club clients would make the firm stronger. Today, external clients account for 50 per cent of the firm’s £2.8 billion in assets under management.

Diversification

Having built up a thriving business serving external clients such as charities and pension funds, it then followed that the firm should deploy the expertise it had built up in managing private clients money. The firm’s management made the bold decision to launch an offshore operation at the height of the crisis in 2008 by buying stricken Singer and Friedlander Investment Management (Isle of Man) – a deal which brought in some £200 million in client assets – and the foundation for a dedicated private client business was set.

The firm is now taking a tilt at the onshore private client market, and has appointed Morgan to spearhead the new business. Morgan, the former head of investment management at Adam & Company (the Scottish sister firm of Coutts), joined Thomas Miller in May as head of private investment management. He was later joined by Andrew Herberts as his deputy; Herberts was previously an investment director at Adam & Company.

Thomas Miller Investment sees itself as slotting nicely between the bulge-bracket banks at one end of the spectrum and stockbrokers at the other, said Morgan, adding that the firm prides itself on the “real clarity of its offering” and sees this as a key strength in what is now a “very disparate” market, in his words.

In Morgan’s view, the UK wealth management market currently lacks focus and too many institutions are “trying to be all things to all people”.  He also sees the big banks with wealth management arms as being too product-focused and overly anxious to increase their wallet share by offering an ever-increasing roster of services. Instead, Thomas Miller Investment offers discretionary portfolio management, and that’s it. At this point Morgan gives some insight into the appeal of his new job. “It’s actually a lot more fun to be given discretion by a really discerning client,” Morgan said.

Front-loading risk

In addition to private clients themselves, Thomas Miller Investment is also targeting intermediaries with portfolios too large (over £500,000) to put on a platform. What all of the firm’s clients – institutions, HNW individuals and intermediaries – share is a keen eye on risk, and it is this focus which the firm is hanging its proposition on, in addition to the clarity of offering previously mentioned. As such, the firm puts risk-profiling at the head of its onboarding procedures. In contrast, “most of the private client sector doesn’t front-load risk,” said Morgan.

“We start off with risk…we believe it’s at the foundation of our interaction with clients,” he said. In fact, the firm “wouldn’t take on a client without a face-to-face discussion about risk”. Morgan also emphasises that his firm sees suitability as an “ongoing debate” which has a valuable educative purpose. After all, “a well-informed client is a long-standing client,” he said.

Risk-profiling and suitability assessment has become a priority issue for the UK Financial Services Authority and it is also much higher on the radar of clients since the financial crisis. Morgan agrees that a step-change in clients’ attitudes has occurred and that they want more ongoing contact with their advisors – and not just in the form of proforma quarterly report. “The days of taking on a client and hardly ever speaking to them are over,” he said, adding that his firm performs risk revisions on its clients yearly.

Communication is key

In fact, Thomas Miller Investment is taking regular contact with clients and responsiveness very seriously, and the firm is consciously building itself around “traditional relationship building and servicing”.  There is almost a sense with some of the bigger institutions that they view communicating with clients as an inconvenience, said Morgan, who firmly believes that “client contact is not an imposition; it’s not a cost”.  One particular source of annoyance to him is how much talk goes on about how best to commoditise “smaller” clients. This is emphatically not Thomas Miller Investment’s approach, Morgan explains, and the firm is actually taking on clients from quite a low asset threshold of £250,000 – clients who would be turned away from the vast majority of the larger institutions. In fact, Morgan takes a very dim view of firms which sideline their smaller clients and seldom make contact. “If you have to make ten calls a day, then get over it, do it,” he said.

It might be that Thomas Miller Investment is onto something here, as while hardly any wealth management firms will admit to it, anecdotally at least many executives believe that the lower end of the wealth spectrum may actually constitute the “sweet spot” for many institutions – the main reason being the complexity and range of services the super-wealthy demand.

Only time will tell how far this turns out to be true for Thomas Miller Investment, but the firm already has 170 private clients on its roster (representing 6 per cent, or £180 million, of the parent’s total assets under management), who are served from offices in London, Edinburgh and the Isle of Man. It may be a somewhat difficult time for new entrants to break into the market, what with the never-ending onslaught of regulatory change and tricky market conditions, but for Morgan “the challenges are the opportunities” and one of the best aspects of spearheading a new business is that it truly is a fresh start. “The great thing is we can get things right from day one,” Morgan concludes.