Daniel Freedman, Managing Director, London &Capital
What is your AUM? (if applicable/separate under administration or custody assets)
We manage approximately US $3.5bn on a discretionary basis.
What has the impact of FATCA been on UHNW clients?
American citizens living abroad are now obliged to produce an 8938 (‘Super FBAR’ Statement of Specified Foreign Financial Assets). This has significantly increased the amount of inform¬≠ation they need to provide to the IRS, thereby increasing their accountancy costs, and in many cases the amount of tax they pay.
What changes/trends have you seen in the market in the last 12 months?
Many of our competitors are now referring their US clients to London & Capital, as we are well placed to manage their wealth. Furthermore, as it dawns on firms that they must register as a foreign financial institution under the FATCA regulation, a number of major players are now simply walking away from US business and deserting their clients. Those clients have become what the indust¬≠ry now refers to as ‘orphans’.
We have also seen a number of firms following an investment profile for US clients rather than a strategic financial planning profile which utilises the best and most efficient planning ideas. This is creating significant issues for US clients.
There has also been an increased requirement for firms to upgrade systems for both suitability and risk profiling ‚Äì a welcome move in an industry that is so vital to clients.
How do you see your business evolving in the next 12 months?
The major banks, which were previously our competitors, are reassessing their propositions, and in some cases referring clients to London & Capital. At the same time, we observe a growing trend amongst some firms to head down market. As a result, we expect to see positive client migration amongst clients looking for a Family Office-style of wealth-management service.
Explain your key offerings for UHNW clients.
Our firm is split into a number of specialist client divisions. They include the US Family Office, managed by myself, and our Private Investment Office, managed by Partner, Iain Tait. This division looks after professional UHNW clients, managing London & Capital’s top 20 UK and international clients, and is seven-strong. We established an Immigration division in September last year, which caters for the investor visa requirements of UHNW inter¬≠national clients from countries such as China and Russia, and we have a Sports & Media Division, which looks after the particular requirements of sports professionals and those working in film and the arts.
Where is your current revenue stream of UHNW clients coming from?
Most of our clients come to us through professional intermediary introductions. We work with approximately 100 accountants, lawyers and trust companies, around the world, and they provide us with a regular stream of referrals. We are also recognised by the IFA community as a firm that provides solutions as a discretionary fund manager, and which delivers specialist solutions for certain clients.
Are clients getting more challenging in their approach? If so, explain how this manifests itself?
I wouldn’t say clients are getting more challenging per se. However, the need for effective risk manage¬≠ment is greater than it has ever been. In a world where interest rates are half of one per cent, and financial markets are difficult to understand, clients have become ‘lost’ as to what risk is and is not.
What is your UHNW strategy?
Our clients typically want three things from us as a wealth manager. (1) Strategic wealth management, where we analyse every aspect of their lives to create the most efficient and optimised financial plan, is the foremost priority. (2) Robust investment management, employing long-term diversified strategies, which temper volatility and manage risk are also key. (3) Most are also looking for a fully compliant Family Office-style reporting structure.
This is an approach that has worked for nearly three decades now, and which has created huge loyalty amongst our clients.
What does London & Capital do for its people?
We support our employees in their endeavours to be the best at what they do. This includes relevant training courses and exam¬≠inations, seminars and inv¬≠¬≠olve¬≠¬≠¬≠ment from the partner group to ensure they get every¬≠thing they require to deliver their role.
We offer incentives such as ‘cycle to work’ schemes, pension schemes and discretionary bonuses. We operate a meritocratic environment where performance is rewarded and internal promotion is championed.
What does London & Capital do for the planet?
We set up our Charitable Foundation, which supports the education and well-being of less-advantaged children in the UK and worldwide in 2005. Over the years, our employees have raised more than ¬£250,000 for the Foundation and donated their time to numerous ventures around the world, which have included building new schools, building self-managed micro banks in remote African villages, and, on a more local level, mentoring at local schools in the Camden area. The Foundation is there for employees to become involved in personal interests within the company and to work with their charities in the company and the community.
We support other charities, too, and recently entered into a formal partnership with an organisation called PAWA (the Pan Asian Women’s Association), which looks to improve education for Asian women from under¬≠privileged backgrounds.
What developments or initiatives have you put in place to make London & Capital a profitable business?
Our Investment Director, Ashok Shah, stepped down as CIO last summer to set up a new division within the company, the ‘Front Office Project Team’. His 40 years’ industry experience will assist our front office operations, ensuring that they are aligned with all new legislation to be introduced and adhere to the reporting obligations set down by the FCA, SEC and SFC (Hong Kong).
We recently elected to work with an external consultant in a drive to improve efficiency across all layers of the organisation, to improve interaction and to increase profitability across the London & Capital Group.
We have also recently invested heavily in a new client relationship management system which will further improve our service to clients.
Who would be your dream lunch guest?
My wife! Working 13-hour days, I rarely get to spend as much time as I would and should with Elaine.
Where would you take a prospective UHNW for lunch?
The Arts Club in Dover Street.
Your formula for success?
Always recognise that the client is the number one priority, and that for them “everything is possible‚Äù.
Tell us three things you wish you had known when starting out?
1.Education is key
2.Beware of leverage. It was something that almost killed us as a business in our formative years, and was a useful lesson in later years
3.Invest more in Central London property.
Three qualities or skills you must have to be successful?
2.Knowledge of your field
3.Thick skin. Never lose sight of your goals, despite the setbacks we all have along the way.