When a client of our investment firm asked us to manage a nine-figure sum they’d liquidated from an asset sale, it sounded like a career-defining opportunity to take our business to the next level.
That was a few years ago.
Today, because of that client, we’re undoubtedly a much better business. But it has little to do with the returns we generated for them. Instead, I believe the making of Alvia Asset Partners has been the learnings we gained from managing and, ultimately, severing that relationship.
Let’s be clear: the decision to sack our biggest client wasn’t easy. As a business, it took us back to breakeven point, which was extremely challenging and uncomfortable. But as our CIO Josh Derrington says, it’s only when you’re hungry that you truly work out what it takes to succeed.
It took us the best part of two years to recover that scale back into the business. But now we have 36 family groups that entrust us to manage their investments, a number that’s steadily growing. Best yet, we’re more effectively spreading our risk, which helps us all sleep better at night.
So, what happened with our mega-client? We went through some discovery to formulate a long-term plan that was consistent with their goals around investment returns and timeframe, and our business ethos and risk profile.
There were early wins, which are always good to get. But as seasoned market observers understand, you’re playing the long game. Just because you’ve had a win today doesn’t mean there’s another in store tomorrow.
Over time, it became clear that one party within the client group wanted to significantly diverge from the plan. They felt they’d become sufficiently versed to make different, more reactionary investment decisions. Given our fundamental beliefs on how money in their scenario should be managed, we just weren’t comfortable with that.
Ultimately, it became a simple ideological decision to move them on. While we could have just acknowledged the change and continued to get paid, that wasn’t for us. We strive to provide a service where we’re making a long-term difference to our clients and the inter-generational sustainability of their capital base. Quite simply, it had become evident that we weren’t the right manager for this client anymore.
But we had just made it clear to our largest ever client that they’d be best managed elsewhere. So, we needed to focus on what was necessary to not just survive, but grow, and that meant finding other clients who shared our ethos. Thankfully, after finding one, who referred us to three new businesses started to roll in.
So, not only have we diversified our client base, we’re now more selective about who we work with and whether they’re prepared to operate with that same open-mindedness we do.
It was a real bellwether moment for the leaders of the business to practise what they preached around tough decision making, demonstrating that the right decisions aren’t always easy to make, be it a hard call on a client or an investment.
And as far as decisions go, it was undoubtedly bold. But had we opted out of making it, I trust that the resulting working environment would have cost the business far more by way of weakened social bonds and employees voting with their feet.
Back when we took on that mega-client, we were happy to work with anyone. Now we’re a little wiser, we’re focused on finding the right clients, cementing our cohesive team, and offering a truly compelling service. And in those respects, we’re richer than we’ve ever been.
