At any given moment, there’s at least one asset management/wealth management campaign running which is all about the critical importance of designing portfolios precisely to suit investors’ individual needs.
At the moment, there are actually two: the long-running Brewin Dolphin consumer-facing campaign, and the new integrated iShares campaign addressing both investors and intermediaries. Both insist, in their very different ways, that the key benefit they offer is the opportunity for some extremely bespoke tailoring.
I’ve probably said this before, but of all the propositions frequently deployed in financial services marketing communication this is the one that resonates with me least.
On the downside, all this tailoring sounds horribly expensive – after all, a really good tailor-made suit can cost ten times more than an off-the-peg one. But where is the upside? I can see that there are some important things about me, my family, my portfolio and my future plans that an investment manager needs to know. But I can’t see how knowing these things is likely to result in some highly individual and differentiated portfolio – there simply doesn’t seem to be anything about me or my circumstances which would lead towards anything any different from what you’d do for any other late-50s bloke who’d like to retire one day, doesn’t want to take too much risk but doesn’t really have enough money.
A five-minute fact find might, I suppose, reveal some particular attitudes towards types of investment I might be a Muslim wanting a Sharia portfolio, or a socially-responsible investor wanting an SRI portfolio (as it happens, I’m neither). But even if, as Brewin Dolphin propose in their ads, they interrogate me for hours, what would make them likely to propose something so individual and so different to me? If they put someone similar to me into, I don’t know, Tesco and Vodafone, why would they put me into Sainsbury’s and O2? And given the enormous extra resource cost and complication of treating me in this individual way,what could possibly be the point?
Some cynics would suggest that at Brewin Dolphin, at least, there is an explanation, even if not a very investor-friendly one: the Brewin Dolphin brokers stick with the firm very largely because they enjoy having the freedom to make their own individual portfolio design recommendations to their clients, so there is a need for some sort of rationale to explain why clients’ portfolios are so extraordinarily different from each other.
But this explanation doesn’t work at all for iShares, who as far as I can see have complete freedom to adopt any strategy or proposition they choose but have still chosen this one.
At an IFA event yesterday, a straw poll of those present showed that a large majority believed there was no demand for highly personalised portfolios even among the most affluent investors (and, frankly, in any case, how would they know whether they were actually getting them or not?). Overall, I just don’t see where the encouragement for this unattractive proposition is coming from.