Changes in 2001
There were a number of changes to this year’s PAM Awards, both to the award categories and to the enhanced Survey methodology that was adopted this year.
The first major change was that the Emerging Affluent Class was combined with the Affluent Class to create a new Affluent Class for client portfolios of less than £1 million. The High Net Worth Class remained as before for portfolios of £1 million or over.
Allocation of Survey Points Between Award Classes
Last year’s allocation of managers into the various classes based on their average portfolio size, or their stated minimum investment was changed. Instead this year, the Survey respondents were used as the barometer.
Overview of Methodology
The PAM Survey charts the collective views of the private client advisory community as to who the leading private client investment managers are. This can only be achieved by adopting a coherent methodology, which genuinely reflects market sentiment.
The Voting Process
We sent written questionnaires to 450 firms involved directly in dealing with private client investment management firms, made up of family offices, trust companies, law firms, accountancy practices and independent financial advisory firms. We undertook that the individual responses would be kept strictly private and confidential and that there would be no corporate or personal attribution.
The Questionnaire Categories
The aim of the questionnaire was to gather market data on the relative performance of the leading private asset management firms, including private banks, fund managers and stockbrokers.
We asked the respondents to name the top managers whom they believed to be the best in each of the categories below on the basis of specific criteria (as shown in brackets):
- Investment Performance: Defensive Portfolios (Criterion: the institution that has, as a whole, most consistently met or outperformed benchmarks set for clients for defensive investment mandates)
- Investment Performance: Balanced Portfolios (Criterion: the institution that has, as a whole, most consistently met or outperformed benchmarks set for clients for balanced investment mandates)
- Investment Performance: Growth Portfolios (Criterion: the institution that has, as a whole, most consistently met or outperformed benchmarks set for clients for growth investment mandates)
- Investment Performance: Specialist (Criterion: the institution that has, as a whole, most consistently met or outperformed benchmarks set for clients for any mandate not covered by 1, 2 or 3)
- Quality and Clarity of Reporting (Criterion: the institution that has most consistently provided the most regular, comprehensive and clear client account reports)
- Transparency and Clarity of Fees (Criterion: the institution whose actual fees have matched most closely those quoted at the time of its appointment)
- Product and Service Range (Criterion: the institution whose range of products and services have most completely matched your clients' needs)
- Image & Reputation (Criterion: the institution whose marketing activity has made the most positive impression on you in the past twelve months)
- Overall Service Quality (Criterion: the institution that has offered the best overall service, covering - inter alia - administration, relationship management, accessibility and product delivery)
Where a vote was cast by a respondent, it was on an unprompted basis. Tru-Est validates all votes cast by verifying the activities of the manager who has been voted for. In addition each respondent was asked to provide supporting comments to add anecdotal feedback to the vote.
Response Rate and Survey Coverage
This year the response rate remained almost static at 203 out of the 450 target organisations, compared to 205 last year. These responses were broken down as follows:
By gathering data on the number of high net worth clients and the value of the assets advised on overall by respondents, we were able to obtain a much clearer picture of the size of the asset pool represented by the Survey. Taking the median values from each respondent this year, the total asset pool covered by the 2001 Survey stands at around £45 billion.
Weighting of Votes
A cornerstone of Tru-Est’s methodology has been to pioneer weighting, both of respondents and of managers. Respondents’ nominations are weighted to match the size of their client base. So, for example, a respondent with a client base worth £50 million in assets carries one tenth of the voting power of a respondent with £500m in assets. Points are awarded to the nominated managers in the Affluent and High Net Worth classes, based on the value of each respondents’ client base and the element of this that relates to high net worth clients.
In order to level out the playing field between large managers and small, each points score has been divided by the nominated manager’s private client assets under management figure, as featured on the PAM database. Thus the final - or net - points score is calculated. In other words, the PAM Awards winners are the managers who genuinely carry the greatest voting points score per pound in assets managed.
Additional Screening Via the PAM Judging Panel
A further layer of manager evaluation was adopted for each Award category in the High Net Worth class. Having established a net Survey points score for the 15 leading managers, we provided each of the twelve members of the Panel with the names of the 15 leading contenders in alphabetical order. Each Panel member then numbered these managers from 1 to 15 in order of preference.
The average score for each manager was then computed by combining all of the Panel members’ votes. The managers were placed in order starting with the manager with the lowest average score. This list was then overlaid onto the actual order of the highest scoring managers from the Survey. The top five managers from both lists were then compared.
Where there was correlation, the Panel voting was relatively simple. Where the lists differed materially, the Panel debated the respective merits of the contending firms - as well as its ability to override the Survey. In only one category, that of Quality and Clarity of Reporting, did the Panel materially overrule the Survey, based on the unique expertise that Panel members have in this area, owing to the aggregation services they provide.