Alan Miller, former Chief Investment Officer and founding shareholder of New Star Asset Management has teamed up with Alexander Spencer-Churchill to launch a new company, Spencer-Churchill Miller Priv
Alan Miller, former Chief Investment Officer and founding shareholder of New Star Asset Management has teamed up with Alexander Spencer-Churchill to launch a new company, Spencer-Churchill Miller Private. And according to Miller, the aim of the joint venture is to revolutionize the private client wealth management industry.
“In my view, many clients of wealth managers have received a dreadful service and as markets have fallen, the extent of this has become clear,” says Miller. “Given this and the current market turmoil, now is a great time to launch a new wealth management proposition that offers access to a fully committed fund manager with a strong track record, extremely competitive charges and a firm commitment to transparency, service and security.”
Miller, who has 19 years of experience as a senior fund manager, and launched the first UK equity long/short hedge fund in January 1997, has opted for two investment strategies using exchange traded funds (ETFs) that will be well diversified by investing in a wide range of funds. The first portfolio will be akin to a managed pension fund with a broad diversification of different asset classes. It will have a long-term bias towards equities and its benchmark will be 70% equities, 22.5% bonds and 7.5% cash.
The second portfolio will offer an absolute return strategy and will be managed on a more aggressive basis and have a target of beating cash by 5%. Both portfolios will be concentrated in the largest and most liquid ETFs. The minimum investment per client will be GBP1,000,000, and all investments will be held in clients’ own names rather than in a fund. The annual management fee will be just 0.75% with a performance fee of 5% of the annual gain, and there will be no restrictions on clients wanting to access their money, in contrast to some wealth managers who restrict the access clients have to their funds.
“The modern age seems to have completely bypassed most private client managers,” says Miller. “The status quo of the City has been maintained by taking advantage of clients’ loyalty through poor performance often being combined with high management charges and dealing costs.
“We have been astonished why various fund managers should unashamedly charge their clients various mark-ups from third parties rather than just receive a pure investment management fee for offering a pure investment service,” he continues. “For example, we cannot understand why clients should indirectly pay for third party research through higher dealing rates when presumably the investment management fee should include research.”
Spencer-Churchill Miller Private believes that most fund managers underperform their benchmark and the compounding of high fees destroys investors’ capital over the long term. The combination of high profile frauds, eg Madoff, numerous fund suspensions or reorganisations and disastrous performance from previously large and well respected fund management names have completely tarnished the industry and its reputation.
The new enterprise is aiming to bring back trust into the market place and is so determined to resurrect the old City adage ‘my word is my bond’ that the manager is putting his money where his mouth is by investing alongside clients on exactly the same terms. Miller, who plans to invest part of his fortune in the fund, will not draw a salary but will be entitled to a 5pc performance fee.
Analysis carried out by Spencer-Churchill Miller Private suggests there are around 140,000 people in the UK with free investible assets of GBP1 million or more, and over 37,000 individuals with GBP5 million or more. The top 40 private client wealth managers also have over GBP450 billion of assets under management.
“Many high net worth individuals are looking for a new approach to wealth management focused on superior performance, fairer charges and greater transparency,” says Miller. ‘We are confident that our proposition addresses these issues.”
As well as managing money, Spencer-Churchill Miller Private will also offer an off-market property transaction service headed up by Alexander Spencer-Churchill. This proposition is currently being finalised and will be launched later this year.
