Are you considering a bespoke portfolio solution for your client?

Key takeaways

• Bespoke portfolios are particularly valuable for clients with complex tax circumstances, including US-connected individuals, Resident Non-Domiciled (Res Non-Dom) individuals, offshore clients, and those moving between tax jurisdictions.
• Clients can tailor portfolios to specific ESG preferences, allowing certain investments to be included or excluded based on their personal values and objectives.
• Bespoke solutions can support estate and succession planning, especially for clients using trusts or offshore structures.
• Legacy or cherished holdings can be retained and gradually diversified, helping clients preserve important investments while managing Capital Gains Tax (CGT) implications. 

For many advisers, an MPS or Multi-Asset Fund on platform provides an efficient and effective way to deliver professional investment management to clients. The growth of these solutions reflects the increasing focus on scalability, consistency and cost efficiency across the advice market. 

However, not every client fits neatly into an MPS solution. Some clients have more complex financial arrangements, specific tax considerations, unique income requirements, or existing assets that require a more tailored approach. In these circumstances, a bespoke portfolio solution can offer additional flexibility, personalisation and control, helping to align an investment strategy more closely with a client's individual objectives.  

At W1M, in addition to our platform-based solutions, advisers can access both fully bespoke portfolios and our MPS Direct offering, providing options for clients whose needs extend beyond a traditional model portfolio. 

Specific Income Objectives 

We believe a custodied portfolio can offer further alignment with individual income requirements compared to a model portfolio on a platform. Bespoke portfolios are tailored to meet the specific financial needs and considerations of the client, allowing for personalised strategies to generate consistent income. This is especially valuable for clients with unique objectives, such as those relying on income for retirement or needing tax-efficient solutions, such as optimising allowances for dividends or interest. 

While such outcomes are possible on platforms, bespoke portfolios can provide a higher degree of control and adaptability, ensuring income requirements are met with precision and in alignment with personal and evolving financial goals. 

Enhanced Tax Management 

When assets are held by W1M rather than on a platform, together with the adviser, we are able to take a more nuanced and proactive approach to managing clients’ tax affairs. For example, we can automatically subscribe to an ISA each year or manage investments transferred in-specie within a Capital Gains Tax (CGT) budget. 

A custodied portfolio allows for efficient use of the annual CGT allowance by crystallising gains in a controlled manner or avoiding exceeding the allowance when necessary. Furthermore, directly managed portfolios enable us to handle CGT-constrained portfolios by transitioning holdings into a W1M bespoke or model portfolio over time. 

Additionally, a bespoke mandate can be structured to be as tax advantageous for clients as possible. For example, by holding higher yielding assets (bonds and real assets) in the tax-free environment, such as the ISA for high-rate taxpayers. The lower yielding equity and absolute return assets could then be held in a General Investment Account (GIA). 

Alternatively, it may be the client or the advisers preference to shelter capital growth within the tax wrappers, which can also be accommodated and we may also be able to hold products, e.g. SIPPs or Offshore Bonds, in our custody, which might not be available or desirable on platform. 

Complex Tax Circumstances 

For clients with more complex tax considerations, such as US-connected individuals, Resident Non-Domiciled (Res Non-Dom) individuals, offshore clients, or those returning to the UK, a bespoke portfolio is uniquely positioned to manage the transition between jurisdictions. It enables careful handling of UK situs and non-UK situs assets, ensuring tax compliance and efficiency. These scenarios often require advanced planning and management to navigate the interplay of multiple tax regimes, safeguard gains, and optimise tax outcomes. 

Moreover, for offshore clients or those using structures such as trusts, tailored portfolio management can help align the investment strategy with the client’s long-term tax and estate planning objectives. 

ESG considerations 

While our MPS is reflective of our integrated approach to ESG, there are clients who would like specific exclusions, preferences or tilts to their portfolio. Advisers may find this can be best executed in a bespoke portfolio where individual securities are selected (or excluded) to reflect the client’s specific requirements.   

Legacy or cherished holdings 

Some clients may hold long-standing investments that carry significant financial, sentimental or family importance. These could include legacy shareholdings or concentrated positions that the client is reluctant to dispose of in a single transaction. A bespoke portfolio can accommodate these assets alongside a professionally managed and diversified investment approach. 

Where a transition is appropriate, a bespoke mandate also provides the flexibility to gradually rebalance legacy holdings into a diversified portfolio over time, within an agreed Capital Gains Tax (CGT) budget. This enables advisers and portfolio managers to take a measured approach, balancing the client's investment objectives with tax considerations and personal preferences. Rather than forcing an immediate restructuring of the portfolio, a bespoke solution can facilitate a carefully managed transition that aligns with the client's wider financial planning goals. 

A closer relationship with a Portfolio Manager  

Our custodied solutions provide access to dedicated Portfolio Managers who are available to both the adviser and the underlying client. For clients who prefer direct communication and performance updates from the PM, this service is more easily facilitated when W1M has custody of the assets. 

PMs also offer enhanced flexibility by phasing cash into the market over agreed time periods, ensuring greater control for advisers and alignment with the client’s investment objectives. 

MPS Direct 

While a bespoke portfolio is by definition, customised to the client, a directly held MPS is also able to offer a more personalised portfolio, adjusting the weights of the component funds to suit the clients wishes. For example, if a client has a large exposure to property, then they might wish to hold a lower weighting in the Real Asset Fund than the mandate guidance. Equally, a client may have fixed income exposure elsewhere in their portfolio, and therefore would prefer exposure purely to equity and alternatives. 

Digital benefits 

At W1M, if the portfolio is held directly, then the client is able to take advantage of our digital account opening process and our online portal, where they can find up-to-date valuations of their holdings. These valuations, for Bespoke and MPS Direct, provide a full look-through to the underlying portfolio. Financial advisers are also able to take advantage of an Intelliflo integration – giving them information on the assets that they are monitoring in one back-office system. 

For further information on our Bespoke or Direct MPS services, please contact your Business Development Manager or email advisersolutions@w1m.com.

Glossary:

ESG (Environmental, Social and Governance): A framework used to evaluate investments based on environmental impact, social responsibility, and governance standards.

Capital Gains Tax (CGT): A tax charged on the profit made when selling an asset that has increased in value.

Bespoke Portfolio: A customised investment portfolio designed around a client's individual financial objectives, tax circumstances, and preferences.

Legacy Holdings: Long-term investments that may have substantial value, emotional significance, or family importance and are often retained over many years.

Offshore Client: An individual whose investments, tax residency, or financial arrangements involve jurisdictions outside the UK.