Best Private Bank in the UK - Schroders Private Banking
Schroders has been one of the ‘nearly players’ now for several years, but the perception amongst the judges of the PWM/Banker awards is that this investment-led private bank is finally getting its act together, after many years of laying the foundations.
Indeed, according to CEO Rupert Robinson, boutique institutions such as Schroders have been spurred into action by the financial crisis. “Private banks must deliver more, and better in the low-growth economic environment we are faced with,” believes Mr Robinson. “Those who can generate solid returns and protect the downside will be rewarded with increasing flows of assets from clients who trust them and are prepared to pay for quality. Realistically this will come from those providers who stick to what they are good at, and don’t claim to be all things to all men.”
At the same time, investment in systems to be able to cope with regulation without suffering problems arising from margin erosion and compliance overload are also key to success, he suggests.
Schroders has recently stepped up its investment in talented thinkers in portfolio management, having added a new chief investment officer, and now about to announce a new head of manager selection, straddling long only and hedge fund strategies. The idea is to also increase the input and experience of asset allocation and risk management techniques from Schroders’ institutional asset management business.
“In recent years we have enhanced our portfolio construction process to reflect a relevant and practical time frame for private clients,” says Mr Robinson, describing a forecasting framework that focuses on a seven-year time horizon and takes into account economic cycles and current market valuations. “We are also incorporating greater flexibility into asset allocation decisions and allowing conviction investment views within a risk framework without constraints imposed by limited tactical ranges, based around strategic long term portfolio weights.”
Among private banks in the UK, Schroders is also one of the more discerning when it comes to minimising fees levied by portfolio managers, in the belief that this is one of the main sources of performance drag in a low-return environment. This means greater use of low-cost passive products and certain structured products such as reverse convertibles and semi- annual review notes, which can exploit volatility to capture attractive coupons. YB
