Former Russell Investments NZ head of institutional, Noah Schiltknecht, has launched a new consulting business targeting small-to-medium wholesale investors.
Schiltknecht will trade under the Makao Investments brand, aiming to carve out a niche among the growing family office, charitable trust, advisory firms and iwi markets in NZ.
Makao is Māori for shark’s tooth (and is also synonymous with ‘resilience’) but Schiltknecht has also acronymised the brand into the slogan ‘Making advice knowledgeable, affordable and objective’.
He said there was increasing demand for independent investment advice in the wholesale market, particularly from smaller entities that don’t fit with the business models of larger consultancy firms.
“They require high quality advice but often cannot afford the fees that some of the current providers in the market charge,” Schiltknecht said. “The business will also do project work and offer tender consulting services to larger institutional investors.”
The firm also offers a unique pricing model where investors will pay for the services they require rather than tying it to the size of funds under management.
“Clients should know what they pay for in advance, rather than paying a high retainer fee for an undefined list of services,” he said. “Makao’s clients will be able to understand and select the components of the advice they require.”
As well, Makao would also donate a portion of fees to charities involved in building “resilience in youth” with clients able to select from a panel of donee organisations.
By the end of this year, the company would provide a “full service, scalable advice offering across governance, asset allocation and manager selection”, Schiltknecht said.
“Makao is also working on an in-house asset allocation model, to provide clients with access to capital markets modelling that puts enough emphasis on risk management and scenario testing,” he said.
According to Schiltknecht, the recent return of volatility to markets has reinforced the need for investors to seek objective advice, rather than “blindly following trends”.
For example, he said investors that stayed the course in global bonds over the last few years, rather than defecting to alternative “ways to avoid duration”, would now be “far better off”
“That is what Makao stands for: avoiding the hype and giving objective advice that should lead to better portfolio outcomes.”
The Switzerland-born Schiltknecht left Russell in June ending a more than eight-year career with the investment consultant and multi-manager house. Prior to Russell he was a senior investment analyst at Vector – his first job in NZ after making a leap-of-faith move here in 2009 that involved quitting a promising career at reinsurance firm Swiss Re.
“I was structuring catastrophe bonds and running a proprietary portfolio of catastrophe bonds and other insurance-linked derivatives at Swiss Re – a job I loved,” Schiltknecht said.
While he struggled initially to find work in NZ he said the move was “one of the best decisions I made in my life”.
“Starting my own business feels a bit similar. I believe it is the right thing to do, but I have to take considerable risks to make it a success.”
Schiltknecht follows a well-trod path for Russell NZ alumni into self-employment including ex NZ chief, Ed Schuck, who formed Fidato Advisory in 2010. In 2015, the-then Russell NZ head of consulting, Daniel Mussett, also left to set up his own shop under the banner of ALSA – for Asset-Liability Strategic Advice.
By all accounts, both Schuck and Mussett are keeping busy enough with plenty of space for a new entrant.
Makao will bring further diversity to the wholesale investment consultancy field in NZ that also includes Aon, EriksensGlobal, Melville Jessup Weaver (MJW), Mercer, MyFiduciary as well as Russell.
Earlier this month, Russell named Matthew Arnold as replacement for Schiltknecht.