Delivering the stability needed to anchor strong performance

21 November 2019

5 minute read

Our Barclays Adviser

Simon Smith

Simon Smith

Head of Crown Dependency Investments

In the world of investments, security and the stability and safety it supports are paramount, especially for fiduciaries with the added client responsibilities that entails. Simon Smith, Head of Offshore Investments for the Crown Dependencies, discusses how Barclays’ investment approach mirrors that of its fiduciary clients.

Being a fiduciary in a world where performance really matters can be challenging. Balancing ethical and legal responsibilities to do your best for clients, with a natural desire for higher returns can, at times, be like walking a tightrope. Volatility in the global economy and geo-political uncertainty increases the tension around decision-making in the best interests of your clients. The cautionary tales of Lehman Brothers and Bernie Madoff ring loudly in the ears of investors and fiduciaries alike, and the security, stability and safety of client relationships, client funds and potential investments becomes even more of a focus.

Putting client interests first

From an investment approach, the egocentric days of a star manager, who makes investments based on instinct over facts and lives (and dies) by reputation alone, may be numbered. The subjectivity and bias that approach engenders has been the target of regulators, keen to promote a more rational, risk-adjusted perspective to investment decisions and asset allocation.

At Barclays, we mirror the fiduciary approach of prioritising client best interests, developing broad solutions that meet the needs of our clients and focussing on security, stability and safety of client relationships and monies. For fiduciaries, it means that when you invest client funds, you can be confident that we’re helping you to find that balance between security and performance. Our approach of undertaking rigorous analysis, thorough due diligence (investment and operational) and robust processes in reaching all investment decisions throughout the lifecycle reflects the values of our fiduciary clients.

Supporting your needs for robust investment analysis

It’s an ethos that runs throughout our investment approach. It starts with our initial exploration of asset classes. Here, we combine a mixture of industry-wide modelling tools alongside our bespoke optimisation model and investment analysts’ expertise. This creates a less subjective model of strategic asset allocation that analyses the past and the future to build a stress-tested baseline.

This includes analysing actual and alternative histories and potential future outcomes to create a range of possibilities, which are then dynamically tilted to account for the economic environment at any given time. This then allows positive security selection to begin. It means that our clients benefit from a combination of experience, expertise and cutting edge modelling techniques right from the outset.

After potential securities are identified (funds or direct), our global analysts undertake rigorous due diligence, visiting premises, meeting management and examining the potential of the investment as well as analysing whether it offers real long-term value to our clients. We remove individual subjectivity from the equation on behalf of our clients, by using a dynamic investment committee to take decisions around investments at asset class, geography, sector, style and security level. The committee meets regularly and, in addition, convenes as required in response to significant market events to reassess, review and monitor assets under management on an on-going basis.

Delivering transparency and security

We know that keeping a close eye on investment potential and performance is another key element of the responsibility you discharge on behalf of your clients, enabling stronger decision-making and rigorous reporting. We also know how onerous this can be when information is out-dated or only available on disparate platforms, which require standardisation. Transparency of information and visibility of positions in regard to client funds can be facilitated much more easily by investment platforms that offer real-time data and that can be integrated with your own systems, to deliver efficiencies and support more robust decision-making.

It’s why we have invested and continue to invest in both our operational and client-facing systems, designing and building an investment platform that delivers real-time data wherever and whenever it’s needed to both you and your clients. It means that you can be assured that you’re delivering the most up to date information on performance or positions with access to settlors, beneficiaries and advisors as you see fit.

Furthermore, investing in our systems isn’t just about adding updates to aged, legacy systems, that can create more problems than it solves. Instead, our investment teams work alongside our technical experts to design new and better solutions that address client needs as they evolve.

Helping you address cyber threats

Alongside prioritising service and accessibility, we understand that system security is crucial, both of data as well as funds. Cyber-crime is a growing threat, with the number of firms reporting cyber incidents increasing from 45% in 2018, to 61% in 20191. Those firms managing funds on behalf of clients and/or those holding client information present a clear target for cyber-criminals. As an example, two out of three legal firms in the UK have been victims of this type of crime2.

Our scale not only provides us with the resources to address the threat of cyber-crime and ensure that our own systems can deal with this on your behalf, but it also means that we can support you in reducing your risk, through providing you with access to cyber-security experts.

Using our scale to support your needs

That scale also brings other benefits for our clients concerned about the security of their funds and investments. We have over 300 years of experience behind us, growing from a predominantly UK financial institution into a global financial powerhouse. Our financial ratios are very strong and we remain the only major investment bank left in Europe. When fiduciaries are looking to justify their choices to their clients or to regulators, our brand strength and reputation is obvious and important.

We use that scale and depth of resource to provide our fiduciary clients in the Crown Dependencies, and their clients, with a combination of on-island expertise that forms the foundations of deep and lasting relationships, with a global outlook and access to a universe of assets. Our joined-up approach allows us to simply and seamlessly meet client needs across industries, product types and locations. There is strength and stability in scale and we offer that as a core benefit to our fiduciary clients.

Taking our ‘fiduciary’ responsibilities seriously means that we continually work with you to monitor and manage risk and performance, using our experience and expertise, alongside innovative technology to support the needs and objectives of you and your clients. Our aim is simple – to provide you with the confidence that you and our clients’ interests are at the heart of what we do.

Please remember the value of investments can go down as well as up, and you may get back less than your original investment.

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