While his 10-year stint at Goldman Sachs prepared him for serving as adviser to wealthy families, Yogi Dewan sees many challenges to the US wealth and asset management model.
Creating a wealth manager to run assets for a future generation of entrepreneurs has long been a pre-occupation of veteran portfolio specialist Yogi Dewan, CEO and founder of Hassium Asset Management in London.
With the 20-year anniversary of the firm’s launch and ceding by two major families, fast approaching, he is starting to look back at the influences which have shaped his career and analyse today’s catalysts for change.
Mr Dewan was recruited to Goldman Sachs in 1996, primarily for his expertise in the big pharma sector, which was of particular interest to major investment banks. He had studied biochemistry at the University of Birmingham, where he now serves on the advisory board.
He soon moved into Goldman’s growing investment management unit to run private wealth. “You want Goldman on your side of the table and they work hard for you,” admits Mr Dewan. “They focus on getting the best people in the world and paying them the most.”
His adventure started during the days when US firms were spending huge resources competing with the ‘Big Five’ UK managers, while also signing distribution and sub-advisory agreements with French, Italian and Spanish wealth houses.
But he soon realised the whole business model relied on promoting investment banking priorities, which “ran the show” at US firms. “In no way was Goldman the Citadel of investment management,” he says.
Other players, such as JP Morgan and Morgan Stanley, were also running fast-growing operations, while Barclays was the UK brand rising to rival the Americans. But those employees motivated by serving clients were fast becoming disillusioned.
“None of them cared. They were a money-making machine, with time horizons of one year or less. They didn’t take a 10-year view,” he says, recalling how young relationship managers in the 1990s were required to sell products based on a 12-month investment outlook.
Most family offices, he believes, are seeking a 10-year investment strategy, with a “trusted adviser”. Large banks — with their cultures lacking openness, transparency and integrity — were failing these clients, he believes.
“Most institutions don’t do better than passive investing,” he says. “They are always under-performing long-term due to fees and charges.”
No more heroes
Taking his cue from investment management heroes — including Berkshire Hathaway CEO Warren Buffet, Hungarian hedge funds legend George Soros and British real estate developer Nick Roditi — Mr Dewan began to take a longer-term view of the world and its markets. These days he is a well-known market commentator, regularly asked to share his calls on Europe, the US and China in interviews with broadcasters.
“At the end of the day, the biggest risks for families are legal, regulatory, divorce and emotional challenges”
Among his mentors, he mentions Andrew Sentance, former chief economist at British Airways and a Bank of England adviser, who taught him economics at London Business School. Gavyn Davies, former BBC chairman and partner at Goldman Sachs, under whom he worked at the Peterborough Court London HQ of the US investment bank, was also a major influence.
And Mr Dewan does not deny that the credibility of having worked for one of the US mega-managers was the over-arching reason he was eventually approached by two large private families in 2006, leading to the launch of Hassium. They asked him to personally manage collective mandates exceeding $1bn in total assets.
“They told me that if they stayed in a Goldman-type environment, a good adviser gets promoted or moves on every three or four years,” remembers Mr Dewan, who has since recruited Paul Sarosy, a prominent player at Coutts, Credit Suisse and Merrill Lynch, to his team. “Their banks would always send a grey-haired veteran to meet them before onboarding, but they would soon be left working with the juniors.”
He recalls what the families said when they approached him: “Will you be here to look after our children, our children’s children and come to see us, wherever we are in the world? Are you on our side?”
Working with an independent firm, rather than one beholden to shareholders or a chief investment officer, was key to the families’ goals, he says.
Mr Dewan describes some of the “horror stories” he has seen when taking over portfolios — particularly containing “structured products sold by big Swiss banks” — and also when acting as an expert witness in court cases concerning family finances. One of the family portfolios he eventually took on contained 2,500 different positions in private equity investments.
“I am very sceptical about the whole industry,” confesses Mr Dewan. “Clients need care and long-term investment, talking about what their families want over a 10-year period and working with their children too. Is Ukraine and Russia a market event? Should they be concerned about Trump? Should they be leaving the UK? At the end of the day, the biggest risks for families are legal, regulatory, divorce and emotional challenges.”
