Broad range of services means something for all

Chris Orchard, chief investment officer at Heartwood Wealth Management, is questioned by Frances Hughes.

Q: What is the structure of Heartwood Wealth Management?

A: There is a strong emphasis on providing a number of services to families and individuals. It is key to our whole approach.

We recognise that larger clients might need a lot more services. We offer wealth management and investment management, but the investment department is always attached. It is integral to what we do.

Q: How many clients do you have?

A: More than two-and-a-half thousand. A client could be using just one of our services or using them all. But more than 50% take up two or more.

Q: What type of clients do you have?

A: It is across the board. We have a large client base of people approaching retirement and already in retirement. But we also have a lot of younger clients, many of whom came from the City when we opened up our London office 10 years ago.

Q: Are your clients low or high-risk investors?

A: On balance, our clients are fairly middle of the road or slightly lower risk.

Q: Why do you think that is?

A: It might be because of people’s experience in the 1990s, or because they are putting more emphasis on getting income from their savings and looking at retirement.

In many cases, especially for the high earners, clients can be simply preserving what they have earned. Also, we as a group are relatively cautious in terms of our investment approach.

Q: What is the average investment size?

A: The average is 350,000, but that figure can be misleading. There is a whole spectrum, with some investments going from under 100,000 and others to many millions. We have a classic pyramid shape, with lots of smaller investors at the bottom, but the upper end is becoming more and more significant for us.

Q: What is the upper end?

A: People who invest above 3m. We tend to look at bands of investment sizes: 0-500,000, 500,000-3m and 3m and above.

Q: What services and products do you offer?

A: We offer a number of services and investment options. We can help clients with tax and estate planning, which includes inheritance tax. We also help with retirement solutions – establishing and managing Sipp [self-invested personal pension] and pension policies. This, in particular, is becoming a very active area at the moment and we integrate pension advice into an investment process.

The investment side links in to all of this. We have three types of investment objective: balanced growth approach, income and absolute return. These are the building blocks we use.

Q: What is your investment style?

A: We believe in a diversified asset approach and it will be applied wherever possible to each of the three models. We believe we need models, built into each process, to make sure what we are doing makes sense.

Once we have ascertained a client’s objective we can deliver in two different ways: one is the direct equity approach; the other is multi-manager. It is entirely up to the client.

Q: Can you tell me more about your ‘private office’ service?

A: It is for clients who use a lot of our services. We also call it the ‘family office’. We wrap up the services they use and there is one relationship director who liaises with the family. It is a relatively small group of clients who use the ‘family office’, but in terms of assets it is quite significant.

Q: The name of the company changed in January, 2006, from Cripps Portfolio to Heartwood Wealth Management. Why?

A: There was a management buyout in December. We bought out the Cripps Harries Hall partnership. Now we are a self-run company – almost completely owned by employees and management at Heartwood. We changed the name not only because of legal implications but also because we had a desire to build our own brand.

Q: Have you made any other changes to the business over the past year?

A: One key change is that we have become more active in promoting our services to professional markets. We are building the firm up in size and reorganising to achieve a more focused client area and more focused investment. We have also widened our use of hedge funds, commodities and managed futures.

A lot of this has came from the requirements of an absolute return model. We have launched two funds that we use as wrappers: the CF Heartwood Balanced Growth fund, launched in February 2004, and the CF Heartwood Pedigree Equity fund, launched in November 2005. They offer solutions for smaller clients. It is harder to diversify for smaller investors. Putting a wrapper around the process dramatically cuts costs.

Q: What is your asset allocation at the moment?

A: At present we are overweight in equities, underweight in fixed income markets and neutral in commercial property. But this is relative to the modelling. We don’t find it easy to find a comparable benchmark. We fix a maximum and a minimum movement in all asset classes.

For example, in the balanced growth model, the minimum exposure we can have to equities is 40% and the maximum is 70%. It is a wide range but the objective of balanced growth is a three-to-five-year horizon.

There is quite a bit of room to make sensible moves whenever necessary. Also, the range for commercial property is 5-20%, and we are sitting in the middle of that.

Q: How many funds under management and administration do you have?

A: About 780m. 100m of that is now in Sipp investments. It is an area we targeted and has grown by more than 25% over the past calendar year. We chose Sipps as an area in which to specialise.

Q: Do you have a minimum investment?

A: We have no formal minimums. We are quite open, but we do state to people we are ideally looking for clients who can invest above 250,000.

Hearthwood Wealth Management was founded in 1988 as a division of solicitors Cripps Harries Hall. In January 2006 it was relaunched as Heartwood Wealth Management. The company, which employs 75 staff, has offices in Lewes, London, Southampton and Tunbridge Wells.