Lothar Mentel on the importance of IFAs and 'fear of the unknown'

Tatton Investment Management CEO

James Baxter-Derrington
clock • 4 min read
Lothar Mentel of Tatton Investment Management
Image:

Lothar Mentel of Tatton Investment Management

German-born Lothar Mentel, who founded Tatton Investment Management in 2012 and remains CEO, discovered his interest in “how the world hangs together” from a young age and attributes his entry into the world of investment management to them.

"I come from quite a political and open-minded family and from my childhood onwards, I was always very interested in the world. Maybe some of my teenage friends thought I was a bit nerdy to be interested in the US presidential election, but I just found it interesting.

"During my studies, when I was offered the opportunity to write my thesis about an investment-related theme, I jumped for it.

"I had spent a year as an exchange student in the US so I was already relatively bilingual and the literature for that theme - performance measurement of mutual funds - was all English, so I thought, I'll try that.

"Unfortunately, I had to write it in German, which was a bit of a challenge."

The challenge paid off and Mentel found himself with an open door into the financial industry when his dissertation caught the eye of a Ruhr-Universität Bochum alumni.

"One of the pioneers of performance analysis of investment returns in Germany was heading up Commerzbank Asset Management at the time and he was also an alumnus of my university.

"He just picked up my thesis and said, ‘I'd like to talk to you'."

After four years with Commerzbank AM, he took a role with Barclays Private Bank that brought him to London for "a couple of years", and 23 years on, he's still in town.

Respected partners

Today, Tatton Investment Management is a £9bn AUM house nearing a decade in the market and Mentel remains at the top of the firm while co-founder Paul Hogarth heads Tatton Asset Management.

The duo met during a joint venture under Octopus Investment, where Mentel was CIO, and bonded over a belief in the place platforms held in the future of the UK retail market.

"We had both observed that platforms were becoming the heart of how IFAs in the UK serve the investing public, and while he looked at it from his experience of serving the IFA market, I looked at it from my background, which was private banking," Mentel explains.

"In a private bank, you have the ability to do custody, the administration of portfolios, trade order management, and then you have a private banker who holds the relationship with the clients.

"The arrival of platforms reminded me of that model, because for all intents and purposes, those platforms fulfil exactly the same function as those in private banks.

"And that's the basis on which we built our business model - if the last mile of the investment management value chain is held by an IFA, then we can focus on the investment management."

That last mile of the journey is more than just a method to accrue assets, however, and Mentel argues the relationship with the IFA community is "absolutely key".

"One very important thing I had learned at Octopus is that if you treat and deal with the IFAs as respected partners and you build that trust through giving them meaningful information rather than just marketing bumf, then you can really win them over."

Fear of the unknown

The provision of information was a key lesson that Mentel took from the Global Financial Crisis, enabling him to better anticipate the concerns of investors when the crises of Brexit and coronavirus emerged.

"I was one of the only ones from the City who went out during that very rough autumn to speak with advisers and their clients. Those halls were packed with people who wanted to know, from somebody in the city, what was happening and where this would all lead to.

"I learned that you don't have to promise them that it will end on Wednesday or in two weeks' time. What they want to hear is why is this happening, why are certain things being done, what they may lead to and how that might compare to what they have experienced historically."

Regardless of how strong an investment proposition is, a client needs to be able to hold their nerve during market downturns to benefit fully from a fund's performance, and this is a vital function of the IFA, according to Mentel.

"You need the IFAs to do the handholding when the going gets tough and I need to provide them with meaningful information so that they can take that fear away.

"Even the best investment strategy sometimes falls down because the individual loses their nerve and I'm really passionate about getting the returns that people ought to be able to get."

More on Investment

Thomas Coughlin of Kinesis Money

Fool me twice: The lessons we are yet to learn in the 100 years since Weimar hyperinflation

Need to recognise inherent flaws in current system

Thomas Coughlin
clock 22 October 2021 • 3 min read
The bank has pushed back against claims it may offload its asset management arm

State Street disavows claims of asset management sale - reports

Sparked by Invesco rumours

James Baxter-Derrington
clock 22 October 2021 • 1 min read
As many rivals up their digital offerings, ASOS will need to work hard to keep growing market share.

Stock spotlight: Supply chain issues weigh heavy but ASOS still good fit for 'patient investor'

ASOS shed 17.3% of its share price in two days

James Baxter-Derrington
clock 21 October 2021 • 4 min read