Chris Mayo can make more claim to the success of Wellian Investment Solutions than perhaps anyone else. The company’s first employee at launch almost seven years ago and current investment director, he is also the closest thing the company has had to a constant presence since founder Karen Vidler spun out the then Fund Intelligence as an independent business.
The roll call of company achievements now includes a Citywire discretionary fund manager (DFM) service award last year and consecutive shortlisting in the Wealth Manager performance awards for the last two years, in addition to a series of other industry plaudits and gongs.
In terms of more direct yardsticks of success, the company has attracted £180 million in client assets, £40 million of which has arrived since this magazine profiled incoming managing director Eric Clapton in mid-2012.
Mayo points out that following a strong 12 months, client assets do not yet accurately reflect the strength of new business however.
‘We had a good year in 2014,’ he says. ‘We effectively doubled our number of [adviser client] partners, due to a combination of things.
‘Partially it was due to a marketing push we started in the fourth quarter of 2013, and partially due to an increasing number of advisers, post-retail distribution review (RDR), taking a moment to sort themselves out, get their processes in order, and look at their optional outsourcing options,’ he adds.
‘The number of people we are talking to is greater than ever before. Almost half of those who have signed up in the past year have placed money with us. Some of them will initially only place one or two client accounts, and what you will find is that a lot of advisers aren’t going to immediately give you everything that they do.
‘Under the terms of RDR they may have processes in place for new clients but still be uncertain about how they handle older clients, or vice versa,’ he adds. ‘Some of them will just place a few clients then place the rest with a multimanager, because they aren’t ready to have the “discretionary conversation”. Different people will be doing different things.’
Nonetheless, the company expects assets to begin following client numbers upwards more strongly over the next 12 months than it did in the previous 12.
While Mayo credits Clapton and business development manager Nick Frank as the driving forces behind the increase in adviser numbers last year, the company has also had help from a less conventional source. At the end of 2013 it hired a telemarketing business to solicit business.
While this was a scattergun approach compared to the targeted hands-on role played by internal staff, Mayo said that pound for pound, the return on the strategy had already more than justified the cost.
‘It’s really a way to generate leads [rather than close deals] and they are doing a really good job. They have generated a large amount of stuff for us. It is a bit of a numbers game but from a cost point of view it has more than justified itself.’
Born, bred and still resident just outside Wellian’s native Tunbridge Wells, Mayo attended a local grammar school before joining a local insurance brokerage while still in his late teens.
After a few years there he had a clearer idea of where his interest laid, and jumped ship to Vidler’s AV Trinity in 1999 to work on its fund research service.
This service – which powered the company’s advisory model portfolios – was sufficiently successful that by 2008 the company had taken the decision to spin it out into a separate, discretionary-authorised entity that became Wellian to run advised assets.
‘[Other discretionary managers] fail to appreciate the value of the adviser. They see advisers as “asset gatherers”, which I find a rather unpleasant term. It sounds like you are sending out worker bees to do a day’s honey collection and it does not work that way,’ Vidler told Wealth Manager in a 2010 interview.
‘It is a business support role we provide. We are not looking to work with hundreds of advisers, we are looking to work with perhaps 50 or 60 and then to have meaningful relationships with them.’
Vidler has since removed herself from the day-to-day management of the company, although alongside Mayo and Clapton she remains a shareholder and chairs the board, and AV Trinity remains a significant referrer.
‘Karen was already running model portfolios [in 1999] and it was something she wanted to develop further. What got the ball rolling was long-term frustration with very lazy and very underperforming insurer-managed funds,’ says Mayo.
‘She had some expertise and background in the sector and it was first beginning to develop its multi-manager offering. We started to develop a panel of funds. I started work with her on that and picked up the client-facing stuff along the way.’
The other driver of client numbers has been the extremely marketable investor return stats, which are up there with the best of the entrants to Wealth Manager’s performance awards.
Over the three years to November, the company’s Balanced model returned 44.17% versus the ARC Sterling Steady Growth on 30.57%, and over five years is up 58.11% versus 41.83%.
The Growth model has returned 41.17% versus the ARC Sterling Equity Risk on 36.23% over three years and 58.05% versus 49.19% over five.
Over the full term it is the Income model that has distinguished itself most however, returning 51.81% versus the ARC Balanced Asset’s 33.85% over five years, alongside an estimated yield of 3.42%. Over three years the Income fund has returned 38.04% versus 24.96%.
‘Clearly performance has been helpful,’ says Mayo of the contribution made by himself and analysts Emma Clarke, Jo Benson and Ed Greenhalgh. The company runs a concentrated shortlist of around 25 funds with turnover kept around 30% in any given 12-month period. We don’t try to make big calls. Fund selection has been a very positive contribution across the board over the last five years, which has been helped by our general bias toward equity income. These have delivered, and we do not go looking for punchy, high beta stocks.
‘Last year was difficult in that we were running underweight bonds. Like most of the industry we didn’t want to buy gilts when they were yielding around 2%, and to be honest I probably wouldn’t change that now even if I could.’
The company has substituted property for credit yield, in particular via F&C UK Property. Within equity yield, Citywire AA-rated Carl Stick’s Rathbone Income fund is a long-term core holding that currently offers particular promise.
‘Stick did have a bad 2008, which dragged down his performance but he has come back, learned from his mistakes and tweaked his process for the better – in particular tightening up his selling discipline,’ Mayo says.
Citywire AAA-rated Martin Cholwill’s Royal London Equity Income, AA-rated Adrians Frost and Gosden’s Artemis Income fund and AAA-rated Davids Taylor and Horner’s Chelverton Income fund are also all core picks.
In the last 18 months following the departure of AA-rated Neil Woodford from Invesco, the house has also subbed in the AAA-rated Richard Colwell and Leigh Harrison’s Threadneedle UK Equity Income fund as a replacement.
In anticipation of 2015, it more recently pared back its risk assets in favour of additional absolute return and property exposure. Primarily, it bought the Absolute Insight Market Neutral fund, a balanced vehicle providing exposure to the company’s range of multi-asset funds.