‘We take a long-term view to investing’

REBECCA ELLIS is co-founder of Pomona Wealth, a personal investment advisor working with leading financial institutions across Europe, Asia, Africa and the United States. She tells CHARLES IKE-OKOH that Pomona is in Nigeria to advise clients here on how to navigate the changes in the UK tax rules for properties and UK-based assets among other issues.

Tell us a little about your background and how you eventually came to establish Pomona Wealth

The start of Pomona was a meeting of two minds, my self and my business co-founder, Pascal Crepin. We decided that, as independent financial advisers who had worked in international banks in the past, we wanted to set up a model based on three key things.

One is transparency. We wanted to make it clear to clients about how financial managers work.

The second is we want to provide performance, which we see is lacking in the market. We see many banks and institutions saying that they offer performance, but in reality that performance is fairly lackluster.

Thirdly, we wanted to give a service tailored to meet each client’s needs.

Banks are changing, there has been a lot of movement. Changing their geographical regions, de-risking, and many clients are getting transferred from one entity to another, either sold as a book or basically told to leave.

We don’t think a client should be a commodity. The banks should provide a service and cultivate a relationship. Unfortunately many can’t do this any more and so companies like ours are born to provide a service that is tailored to clients’ financial needs.

And therefore, we founded Pomona Wealth. We really like the idea of Pomona, the Roman goddess of the orchard, as the basis of our philosophy for our business and we have developed our vision from her story. In the same way an orchard has many trees, most people have wealth in different areas; we see the similarities are very close to wealth management.

The groundwork is done by laying out the strategy for the wealth and we then carefully select and nurture individual strategies as we would do with trees and bushes which can be guided by our clients’ interests coupled with our expertise.

We take a long-term view to investing and our role at Pomona is to provide service to clients to grow their assets to their long-term objectives.

When you say you are a family office, what exactly do you mean

A multi-family office is a term used when we serve many clients. We don’t just serve one family, which is known as a single-family office, and because we do more than just advise on financial assets, we are not just a financial service company.

The primary service that we give to clients is investment management on a discretionary or advisory basis. If you have a portfolio of bonds or equities or investment instruments, we can help guide and give advice. We also look at succession planning, which concerns and how you can pass wealth onto the next generation. This will vary according to the objectives of the family.

As you can see, this is more than just a finance service company whose aims to grow your equity by certain amount or benchmark. Our role is to be in the core of your aspiration of what your wealth should bring you and what you want it to do for you; we are here for the long term to help with your affairs.

How does Pomona Wealth differ from other financial advisors? What do you offer your clients or what do you do differently

Firstly, we focus on their balance sheet. This is the phrase I love. We focus on their needs and what they want. Every company will focus on their clients but we are actually servant to our clients needs. Primarily, we look at what you want to achieve and how you want to achieve it, and if our clients have a clear idea then we can put the planning in place to get there.

The difference between us and other companies is, firstly, we are transparent, and we are very clear-cut on our pricing and help negotiate so that the client gets the best prices and services possible. We do not accept retrocessions (payment from product providers to induce us to place funds into a product), which may not be the best choice for our clients, we decided we would remain 100% independent.

Secondly, we perform; we outperformed most financial indexes last year. This year has been challenging with falling oil prices, volatility in all markets (Equities, Bonds and Commodities) however, as we are focusing on the long term we ensure there is good cash flow from dividend income or fixed income coupons to have growth in the portfolios and ensure we beat cash returns in developed markets.

Thirdly, if our clients need something, we can achieve it. We have a network of professional trusted advisers that we can pool together and bring to our clients’ desk. They do not need to spend time running around looking for an adviser in tax, in law, or properties. We have over 15 years of building a professional network that we can share with our clients. We are here to provide anything they need thus we give absolute unparalleled service.

What is your investment strategy-real estate, LBOs, Venture capital

Our investment strategy is very simple. When our clients come to us with some of their assets and say to us ‘we want to invest’, the first question is what is your objective and how do you want to achieve it. Firstly, we try to put them through a risk profiling based on behavioral finance. This helps understand their past experiences, how they have managed their money, their current experience and how they hope to develop their wealth in the future.

Once we have all that information, we can then set a plan to reach their objectives.

With regards to investment vehicles, we tend to stick to traditional direct equities and fixed income bonds, though we may sometimes use complex structured products. However, we are very cautious in our approach to these types of products, which are very opaque and must be reviewed thoroughly before investing.

We can use mutual funds, but we believe they are very mixed in the performance they can achieve for clients. Depending on the client’s needs, we would only go into Hedge Funds or other alternatives if they wanted the exposure. But in all cases, we undertake thorough due diligence to analyse the investment opportunites for our clients.

If our clients want to buy into a portfolio of properties, we have a number of property agents who can look after such requests. We also work with a number of private equity firms for clients who seek direct investment opportunities.

We have a strong network and bring to the table a breadth of services and expertise in different investment vehicles. We ourselves evaluate and monitor these specialists to ensure they are the best in field and minimize unnecessary risk to our clients capital.

So what are your set ethical standards and how do you show that you are complying with those set standards

We are regulated in Switzerland and the Swiss regulatory authority is Financial Market Supervisory Authority, FINMA. We are also regulated by a self-regulatory body called PolyReg. They closely monitor independent financial advisors like us and we have to adhere to all regulatory requirements that FINMA sets out. We hold ourselves to a high ethical standards and we also aim to keep our clients compliant with any new rules that emerge from their home or current country of residence.

So for you it’s about time you staked your bet on Nigeria. What is the motivation for that

Since starting Pomona, we have acquired many clients from referrals from our client base and our network. We have cemented our services in London, in Switzerland and Europe, with many people in our network originally hailing from Africa. For these clients, the most topical area of concern is currently with the changes in the UK tax rules for properties and UK-based assets. A number of clients or prospects are coming to us for guidance. From this interest, we decided it is time to go to their home country to meet them to understand how we can help with their assets at home and further afield. We have decided that Nigeria and Kenya, which are our main Africa markets, are good areas to get up close and personal with them.

We see a great relationship with Nigerians and the international community as many either have a connection to the US or the UK. This gives us the opportunity to advise people who seek a combination of investing locally and internationally. Nigerians want to do business and we want to do business and I think is a great match.

We’ve had a lot of movement on the regulatory front, what are the main issues that could affect you and your clients here or that you are already encountering where you currently have clients

One main concern here in Nigeria that we hear from existing clients is the FX control on dollars. With the biggest issue at the moment for the economy being the fall in oil prices, now approximately 48 percent lower than in 2014, this has had a major strain on a country which has a high level of dependency on oil production.

We found that it is becoming a concern how people are going to pay for services that they have outside, especially school fees. Many people educate their children abroad, and for those who have money outside, they are now using this money to pay for this service from Nigeria. Thus, we see firstly the controls on dollars have a major impact on individuals and businesses. Businesses are struggling to do business with international companies because they can’t service their supply chain. Nowadays, there is a global supply chain in most businesses, and isolating yourself through such controls can be a major risk to the economy.

It also affects the reputation of Nigeria, we feel that these controls may be negative for businesses looking to set up relationship in Nigeria.

You do have a view about Nigeria’s investment environment. You’ve talked about the FX control. Can you share some of those with us

We see there is optimism despite the drop in GDP growth from 6 percent to 2.5 percent in the second quarter of this year. That is a huge change in a year. Even though that is a huge drag on the economy we see that normally when an economy is under stress, innovations happens. And one thing that we are quite optimistic about is that when the new government cabinet is formed, if business can have an open playing field, this will help business growth.

We see there is potential, but there is need for diversification away from banking and oil. But we are hopeful about the prospects.

Nigerians are very keen to do business. We see it as a very open country. The key concerns are always government policies, FX control, and then finally the stubborn issue of the impact of corruption. This has to be looked at very seriously by the incoming government and we hope we will see strong measures to reduce this problem from the economy.

One thing that we will say is that if all these things can be improved, then the future is bright for Nigeria because of the attitude of the people here.

What are you hearing from investors on Nigeria’s financial system regulation? Is it something that emboldens you

I think the main issue is the safety and security of assets, how banks are managing assets locally, and confidentiality. What we are seeing from the national hub is how banks are not managing risk very well and how they are not very diversified, so many of our investors are saying locally, they are a bit worried about what is happening. That comes again with regulations and it is important again to have a government that focuses on improving corporate governance.

Internationally, there are a lot of changes in banking regulations. Many banks are re-organizing themselves because a lot of banks went through what we call the universal banking model, which meant that they have a corporate division, an M & A division, retail banking, investment banking and the private banking divisions. For some banks like HSBC, you now need to have $15 million in liquid assets to have a private bank account with them, unless you are living in Asia or the UK.

If you are in Africa and you have only $2 to $5 million you are now being told to leave the bank and you are made “homeless” because of the banks change of strategy.

I think for most clients this is a worrying trend, leaving a question mark over where they should go next. In addition, with a high turnover of staff it’s very hard to stay in touch with these big banks because of these changes. Many are at a loss where to turn.

How comfortable is Pomona Wealth when clients’ circumstances change from time to time and their risk profiles, too, change over time. How do you respond?

We do very in-depth analysis by using our behavioral finance risk questionnaire, at the beginning to really find the best approach for the client. We consider the risk, experience and approach (analytical or intuitive styles) to provide the correct plan and a good communication channel of how we anticipate to get their goals.

So we firstly, find out their approach, their needs and set a plan of regular communication to monitor and inform of how the plan is progressing. We invest in liquid instruments, so that if money is required we can support them in any emergency that may arise

We don’t recommend changing the plan constantly because if you do that you will pay more commissions for the transactions needed to modify the strategy. But if clients needed to change we could of course accommodate that.

For us, the idea is to find out the objective from the beginning, we stick to the long term view. We try and talk to clients about why they are changing, how they are changing, and whether it is the right thing for their long-term objectives. We try and make sure they are doing the right thing.

How often do you update your clients on portfolio performance

We typically do a monthly review for our clients. Some want more, some want less, but we can pull valuations every single day of the week. That is very feasible to do for our clients if required.

We aim to see our clients 4 times a year and we want to have an open communication channel to ensure our service is tailored to both their performance needs and their often busy schedules.

CHARLES IKE-OKOH