Case Study

Providing comfort and control

The background

This UK-based family sold their family business around nine years ago for £60 million. At the time, they invested the majority of the proceeds, and divided up the sum between three investment managers, who had put in place some structures to optimise taxation. The family maintained relationships with all three, who they had either worked with previously or had been recommended by third parties.

The family’s investment concerns were as follows:

Were the investment managers performing as they should, given the level of risk employed?
Were they following objective guidelines issued to them originally, or had there been drift?
Was there overlap or duplication in style between the three, or were they individually adding some value?
Did their pricing remain competitive?

Our team held interviews with the investment managers, and carried out a deep review of all portfolios to understand the answers to the key questions posed.

The conclusions were:

One manager had not correctly interpreted the mandate and was employing materially more risk than the family wished to tolerate.
Two managers were underperforming their peer group benchmarks, of which one was employing unsuitable illiquid and esoteric assets.
There was style and asset duplication across all three portfolios.

The initial action taken was to replace one manager using a beauty parade process. This reduced costs across two of the three, and meant one manager was on “close monitor”.

There were further concerns about how the family’s wealth was structured:

The family had UK discretionary trusts, and were concerned about the 10-year charge and whether these structures remained suitable
The children were in their early 20s, and were completing tertiary education or embarking on their careers. They did not know the extent of the wealth, and there was concern about how it might affect them and their pursuit of careers.

To address these concerns, our team engaged a specialist London law firm to review structures and advise on alternatives. The result was the establishment of a Jersey-based Family Limited Partnership, managed by a local fiduciary.

Alongside legal input, our experts created a family constitution which all family members signed up to. As a result, the children are now fully engaged in the process, and have visibility over all of the assets.

The constitution required that the children obtain prenuptial agreements, which we have facilitated to help protect the accumulated family wealth.

The outcome

The family now feels in control, and that the investments are working as they should. There is comfort that experienced individuals are constantly assessing underlying managers, sitting alongside the family with their best interests solely in mind.

What clients say

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