Why Choose Boutique Investment Management?

The members of our team are escapees from London-based investment banks, asset managers and investment management companies, benefiting from experience at larger commercial institutions but preferring to practice in a smaller, more approachable, and friendlier boutique wealth management environment. 

Subsequently, our clients benefit from closer and direct access to higher-quality, more experienced professionals than they might have at a larger firm. 

Featherstone is committed to keeping the size of our firm small enough to benefit our clients, and we will close the door to new investors when our size is optimal. 

We will always remain a boutique wealth management firm, and here’s why: 

“As a firm grows in size, it becomes more institutionalised. The staff loses its sense of ownership of the firm, and motivation drops. The culture changes, and the shared vision fades.” Jonathan Little (Northill Capital)

1) A more personal approach

• Clients deal directly with senior members of the firm 
• We focus on building long-term relationships with our clients 
• Unlike larger firms, boutique managers tend to have more bespoke portfolios, enabling them to focus more on each individual’s specific needs and preferences 
• An open team structure means there is always someone on hand to help 
• A friendly and approachable atmosphere 

2) Alignment of interests

Within many boutique and family office firms, such as Featherstone, clients are able to invest alongside the owners and employees of the business. This ensures that the firm has a vested interest in the long-term success of a strategy. 

3)  In-depth expertise

Boutique investment managers often concentrate on specific industries, asset classes, themes and strategies. This allows them to develop deep connections, vast expertise and a complete understanding of the nuances within their chosen areas, something bigger firms with huge client portfolios cannot easily do. Here at Featherstone, we are experts in thematic investing.

4) High level of agility

Due to their size and approach, boutique investment managers possess a level of agility that allows them to quickly respond and prepare for macro surprises and overall market changes. It’s much easier for a small boutique firm to adapt its investment strategy to deal with challenges dynamically without the excess red-tape that often slows down larger institutions. 

The UK wealth management industry has consolidated and is becoming increasingly homogenised. This is often to the detriment of the client, who now has less choice and is bundled into a strategy that is often too large to offer anything beneficial.

This view is summed up succinctly in Citywire:

“The larger wealth managers are busy consolidating, which means that they then run up against company or investment fund liquidity issues, meaning that boutique funds and non-large-cap companies are often off the menu, which is where many of the best investments are.”

Some limitations of these larger firms include: 

1) Limited investment options

As large funds grow, they cannot invest in smaller, more niche companies due to the scale of assets that they need to deploy. For example, a firm managing £150bn is likely to find it impossible to allocate 1% of their fund to a small, sector specific investment company with a small market cap. Instead, it is typical that large asset managers are restricted to investing in the largest companies, and their investment choices become more limited as they grow. Smaller companies may potentially outperform larger companies over the long term.  

2) Impersonal approach

Due to their sheer size and scale, larger investment firms tend to take a more impersonal, one-size-fits-all approach to investing. This contrasts with the more personalised and hands-on approach that boutique firms provide. Large institutions often treat clients as numbers rather than individuals, lacking the ability to tailor strategies and provide the quality of service that boutique firms really excel at.

3) Slow decision-making

Larger firms tend to have long and drawn-out processes for making large (and small) decisions. This can lead to just following mainstream ideas instead of actively thinking creatively, which massively limits their ability to adapt to changing markets and always means they are left behind as trends come and go.

4) Risk aversion

While large firms have vast research technology, teams and resources, their risk management teams often put tight controls in place to limit true active management. This forces fund managers to stick more closely to the benchmark or index instead of accessing potentially better-performing investments.