What Select is: implemented investment consultancy for trustees

Insights

Why the trustee’s real choice is no longer between investment managers, but between two fundamentally different models for outsourcing investment responsibility

5 mins

Topics

The Select Model Select Connect

Author

Tom Wiseman

CEO

Tom is the Chief Executive Officer of Enhance Group overseeing our multi-jurisdictional Monitor and Select solutions from our Jersey headquarters.

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Most trustees outsource investment management by appointing one or more discretionary investment managers. The model is familiar, but it carries built-in inefficiencies: house-style limitations, segregated mandates that are costly to change, and the trustee left to coordinate across managers and platforms. Select is a different way to outsource. This article explains how the trustee experience remains just as hands-off as a traditional investment management relationship, with the added benefits of regulated independent advice, an open architecture fund universe, and meaningful cost and operational efficiencies.

Why the trustee’s real choice is structural, not relational

When trustees set out to appoint, replace or rationalise their investment managers, the question they typically ask is which firm they want to work with. It is the wrong question. Every investment manager pitches a relationship, a process and a track record, and the differences between managers, while real, are smaller than the differences between the underlying models they are operating. The choice that matters is not who to hire. It is which underlying model to hire into. One option is a trustee experience built on segregated discretionary mandates, run by individual managers. The other is an implemented investment consultancy model that selects the best funds across active, passive and alternative strategies, and implements them on a single platform. These are two different theories of how investment management for trustees should be organised. The first is the model wealth management has offered for decades. The second is closer to how institutional investors have operated for years. Select brings that approach to private wealth.

The Select model: structurally different, operationally familiar

The three pillars below capture what sets Select apart from a traditional investment management relationship. Each has a parallel in the traditional model, a house style, a segregated mandate, a single relationship, and Select replaces each with something more flexible, transparent and unconflicted. The trustee approves every recommendation, retains full decision-making authority, and gets the same hands-off operational experience as in a discretionary mandate.

Most investment managers run their clients’ portfolios in a single house style: unapologetically active, mostly passive, or systematic and thematic. None is properly open architecture across all three, because the manager’s commercial structure depends on selling the style it specialises in. That is a constraint trustees inherit on appointment, not one they should be paying for. Select is open architecture by design. The independently chaired Investment Committee approves a fund universe spanning active, passive and alternative strategies. The Investment Consultant then selects from that universe to build a portfolio matched to the trustee’s investment policy. Active managers are used where they earn their fee. Passive vehicles are used where they win on net-of-fees efficiency. Alternative strategies are used where uncorrelated returns or specialist exposure justify a role. Every fund has been through the same 5P research process before approval (see The 5P process).

Investment managers running segregated discretionary mandates spread their attention across hundreds of individual portfolios. A fund manager running a single unitised portfolio focuses entirely on that portfolio. The performance gap that opens up accumulates over time. Funds are also typically more tax-efficient than segregated equivalents, cheaper to switch between when manager selection changes, and operationally simpler for the trustee to administer. Select is implemented on a leading private banking platform that integrates with Connect. The platform is the custodian; Enhance never holds client assets. Centralising investments on a single platform delivers the efficiency benefits of consolidation, including competitive lending, cash management and FX solutions, alongside a simpler reporting, bookkeeping and governance footprint than five separate custody relationships. Connect provides the data layer that makes the structure work for trustees (see Retaining existing managers), beneficiaries and their advisers.

A traditional investment management relationship is a single point of contact. Select gives the trustee a team: a dedicated Investment Consultant, a Research Analyst conducting the underlying 5P fund research, and an Associate handling day-to-day execution. Behind them sits the independently chaired Investment Committee that approves the fund universe, and the Governance Manager who supports the trustee’s Connect access. All of this is included in the single, tiered Select consultancy fee. There is no double charging, no separate Monitor fee, no separate Connect fee, and no commissions or retrocessions paid by the underlying managers. Connect access extends to the trustee and the family members associated with each client group.

01 Objectives evaluation

The Investment Consultant evaluates the trustee’s investment aims, risk tolerance and fiduciary responsibilities: what the portfolio is for, who its beneficiaries are, the return needed, the risk tolerable, and any tax, jurisdictional, ethical or liquidity constraints.

03 Manager selection

The Research Analyst applies the 5P process, Performance, Process, People, Price, Planet, to identify leading funds across active, passive and alternative strategies; the Investment Consultant selects from the IC-approved list to match the trustee’s policy.

Advisory, not discretionary: the regulatory difference

Every Select recommendation is approved by the trustee before Enhance implements it on the platform; the trustee retains the decision-making authority that defines the trustee’s fiduciary role. Enhance is regulated by the Jersey Financial Services Commission to give investment advice; it is not authorised to manage discretionary mandates and does not seek to be. In practice, the trustee gets the operational experience of a traditional investment management relationship, hands-off, professionally implemented, regularly reviewed, with the regulatory integrity of regulated independent investment consultancy. Enhance brings the regulated advice, the IC-approved fund universe and the implementation; the platform partner provides custody; Connect provides the data.

The bottom line

Select differs from traditional investment management in its underlying model, yet remains operationally familiar. It offers open architecture fund investing, a single private banking platform, regulated independent investment consultancy, and a fee model that aligns incentives with the trustee's fiduciary duty. For trustees comparing Select against the investment manager relationship they currently have, the question is not which firm has the more compelling pitch. It is which model better answers the problem the trustee is trying to solve.

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