In an article by Huntley Medley in the Friday Financial Gleaner of July 31, 2009, Chris Williams, managing director of NCB Capital Markets Limited, is quoted as saying that small wealth management firms will not be able to survive and compete with large institutions like National Commercial Bank (NCB) and Bank of Nova Scotia Jamaica (BNS).

He makes a number of points in support of his proposition and as the managing director of a small institution I would like to put forward another view.

The first point Chris makes is that the market for wealth management services is distribution-driven, not product-driven, suggesting that it does not matter whether or not you have good products, your survival and success will depend on having a wide distribution network. This may be so for the mass market, but it is certainly not so for the sophisticated or discerning investor, whether large or small.

Personalised service

Sophisticated investors do not want to be presented with a one-size fits all approach to their investments, and they demand personalised service with investment products and portfolios that are tailored to their specific needs and risk tolerance.

This is where the small wealth managers who focus on personalised service come into their own and are far more competitive than the large institutions.

In fact small institutions are more than happy for the large players to concentrate on distribution and the one-size fits all approach, while we concentrate on providing excellent personalised service to the marketplace.

Another assertion that Chris makes is that wealth management firms will need a large balance sheet to survive.

This is particularly puzzling since wealth managers are generally involved in selling securities rather than taking on large balance sheet risk, so that a large capital base is not essential to the business model. Furthermore, as long as a wealth manager's operations are efficient and profitable, small size is not an obstacle to survival and prosperity.

Small wealth managers can survive and prosper as long as their capital base is sufficient to support the risk weighted assets on their balance sheets and their operating costs are proportionate to their income.

At Sterling, we consider ourselves to be ample proof of this fact, having grown organically over the past eight years from a tiny start-up to being an established part of the local wealth management landscape.

When Chris makes the assertion that all of us essentially carry the same products, one can only assume that he is speaking for the 'big boys' - NCB and BNS.

It is certainly not true for the small and nimble wealth managers who specialise in personalised service to their clients and who do not subscribe to the one-size-fits-all approach of the large institutions.

Here to stay

Small wealth managers focus on meeting the specific investment needs of discerning investors who want to optimise on their investments by creating portfolios that are tailored to their specific objectives and risk tolerance. There is a whole world of securities to choose from on the local and international markets and wealth managers who care about their customers will take the time to choose from that wide array of investment options, securities which best meet the needs of each individual client.

So, unfortunately, for the 'big boys', small wealth managers are not going away any time soon.

We are quite happy to leave them to their focus on distribution, while we focus on providing personalised service to the discerning investor who wants to maximise his or her returns and get the best that there is on offer on the local and international capital markets.

Charles Ross is CEO of Sterling Asset Management Limited.

charlesr@sterlingasset.net.jm.