Why fiduciaries should actively seek diversity of thought

Simon Smith: Ultra-high-net-worth individuals are used to receiving bespoke services. Often, they have strong views and specific experience that they want to see supported by their service providers.  Credibility and experience is critical.

We believe that fiduciaries with access to diverse expertise across different industry sectors, asset classes and jurisdictions will increase their appeal, as they can navigate to the best global opportunities for their clients. 

Shenal Kakad: I think you would want to have a diverse team around a client investment portfolio, because one size does not fit all.  And I think with a team approach, diverse thinking, you debate, you challenge, and you actually understand the client’s need better.  And ultimately, that will create a much better portfolio for a client over the long term.

Alex Joshi: Diversity of thinking can give clients the confidence to invest and create the right conditions for effective decision-making, to help investors overcome some of the common behavioural biases which make investing more challenging. 

Shenal Kakad: The breadth of thinking in a large team helps to avoid geographic bias, product bias and style bias.

Alex Joshi: All investors, irrespective of wealth level, are affected by similar psychological biases.  The issue with ultra-high-net-worth investors is, the stakes are higher and so, potentially, the negative consequences of these biases are larger, which means that it’s more important to be aware of them and to be addressing them. 

Simon Smith: When we think about optimising diversification and decorrelation, the quality of thought leadership and research is the starting point, which creates a solid investment case and philosophy that’s consistently proven over market cycles.  Next, overlay the client’s interests and needs – for example, philanthropy, sustainable or next gen – then use intelligent asset allocation and security selection in both the public, but also critically, the private markets, to drive real return. 

Using a provider with extensive reach and a track record that’s gone through the good and the bad times, I would argue is ‘the’ most important decision a client will make.  Post this stage, composure and clear thinking during times of stress comes to the fore.  Relationships are made or broken during these moments of truth.