Last year, financial advisory firm Minchin Moore hired Jamie Wickham, former Managing Director of Morningstar Australia, to lead the group’s push into the ultra-high net worth market. Wickham shares the firm’s plans and investment philosophy with [i3] Insights.
Minchin Moore is a bit of an enigma in financial advice.
For a firm of its significant size and influence, it has a relatively low profile.
This mystique has been by design. For over 14 years, the firm has stayed under the radar and largely shirked the financial press, as part of a deliberate strategy to attract only the right type of clientele, according to the firm’s Co-founder and Managing Partner Mark Minchin.
“We’ve been very deliberate about who we work with,” he said.
“We want to work with successful and humble people, and the best way to attract this type of client is still through private networks and word of mouth.”
From its humble headquarters in Sydney’s north shore (if you can call Mosman humble), the group has grown quietly, both organically and through M&A, to become one of Australia’s biggest and best private advisory firms.
Today, Minchin Moore employs over 50 people including 20 lead advisers, across seven locations, and manages around $4.2 billion.
It is privately-owned by 17 partners.
We are investment experts, but our DNA is different. To us, a client’s circumstances, needs and objectives are not secondary. The first thing we do is spend time getting to really understand our clients and what’s important to them
Last year, it hired former Morningstar Australia Managing Director Jamie Wickham to lead the group’s push into the ultra-high net worth market, as it seeks to expand its relationships in the family office and not-for-profit sectors. The group’s expansion plans also include recruiting other quality advisers.
According to Wickham, the time is right for the group to open up about its capabilities to a wider audience.
“Minchin Moore has been supporting successful individuals and families for more than a decade. We have helped hundreds of clients build and manage their wealth, and achieve their goals and objectives,” he said.
“Very few privately-owned firms have the resources and capabilities we have, and we are using this platform to bolster our presence in the ultra-high net worth and not-for-profit segment of the market.”
By ultra-high net worth (UHNW), the firm means families with investable assets of $30 million plus. Whilst Minchin Moore’s sweet spot is in the traditional, high net worth (HNW) $3 – 30 million range, the firm is having increasing success bringing on new clients in the $50 million -$100 million range and over.
While there are some nuances between HNW and UHNW, namely time frame, liquidity requirements and capacity for risk, the group’s advice and investment philosophy applies equally to all clients including not-for-profit organisations.
Its advisers work with clients to develop a strategic financial plan and an investment program that is tailored to their unique circumstances and goals.
“Many private wealth firms come from a private bank or stockbroking background and focus primarily on investments, but Minchin Moore’s background is personal holistic advice,” Wickham said.
“We are investment experts, but our DNA is different. To us, a client’s circumstances, needs and objectives are not secondary. The first thing we do is spend time getting to really understand our clients and what’s important to them.”
Client-first Philosophy
That client-first, advice-led approach underpins the group’s investment philosophy.
There is a formal separation between the group’s advice team, which is led by Minchin, and investment team, which is led by Andrew Marchant, Chief Investment Officer.
Advisers are responsible for managing the client relationship and defining the client’s investment parameters and program in line with their needs. The investment team is responsible for building and managing “low-cost, highly diversified, fit-for-purpose” bespoke portfolios, in line with the client’s investment program.
For UHNW and not-for-profit clients, the cornerstone of the client’s investment program is a highly personalised investment policy statement (IPS). Every client is responsible for shaping their IPS including its purpose, objectives and investment parameters in conjunction with the adviser.
A seven-member investment committee that is chaired by Marchant and includes Minchin, three other Partners and an independent asset consultant governs the group’s investment philosophy, process and framework, including strategic asset allocation, risk/return objectives and investment selection decisions.
Portfolios are built and managed in-house, primarily with discretion. The group’s primary platform is Westpac’s BT Panorama; a nod to Minchin Moore’s heritage as part of the bank’s defunct licensee Securitor Financial Group.
Wickham describes the firm’s investment philosophy as “evidence-based”. It leans heavily on the learnings of academia and market research, rather than focusing on assumptions and forecasts or trying to time markets, as the basis on which to construct portfolios.
Rebalancing is a risk management tool but also a source of returns. Across asset classes and sub-asset classes, including equities, there is a tendency to mean revert. A disciplined approach to rebalancing ensures that investors take the cream off the top of assets that have outperformed in a certain period, and allocate it back to assets that have underperformed
The group firmly believes that returns are largely determined by asset allocation and the majority of returns are driven by the capital markets themselves.
Portfolios are strategically rebalanced every six months.
“Rebalancing is a risk management tool but also a source of returns. Across asset classes and sub-asset classes, including equities, there is a tendency to mean revert. A disciplined approach to rebalancing ensures that investors take the cream off the top of assets that have outperformed in a certain period, and allocate it back to assets that have underperformed [in that period],” Wickham said.
“Our job is to establish the right investment framework and build an investment program that aligns to a client’s needs and objectives, and then get out of the way and let the markets do the heavy lifting. The long-term impact of systematic rebalancing and compounding is material, and magnified by our focus on keeping costs down.”
The firm’s sharp focus on cost management doesn’t prohibit it from using active managers. It takes a systematic approach to investing in direct securities (for core Australian equities and credit) but uses both index and active managers to gain exposure to other asset classes, the latter primarily to gain exposure to small cap stocks.
Looking ahead, Wickham is focused on continuing to grow the group’s UHNW and not-for-profit business, both organically and through M&A.
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[i3] Insights is the official educational bulletin of the Investment Innovation Institute [i3]. It covers major trends and innovations in institutional investing, providing independent and thought-provoking content about pension funds, insurance companies and sovereign wealth funds across the globe.