In the beginning…

July 16, 2018

Following on from last month’s article which detailed the reasons for founding Vertem, John Dance explains how the independent stockbroker developed its formula and how it attracted its client base, while looking towards a bright future for the firm

My article in last month’s edition of North East Times highlighted both the inspiration and motivation that acted as the catalysts to forming Vertem.

This month, I will try and identify how we took the idea and turned it into a commercial reality, quite the challenge given that in our previous roles we managed the client bank collectively as a team and thus didn’t have our own clients to bring across. Our first step was developing our ‘process’ and deciding what our investment philosophy and propositions would look like. At the top level, me and Gary Stockdale, our co-founder, often had conversations about the flaws in academic-based asset allocation models used in the industry.

While they worked well in theory, in the real world they often ‘came a cropper’, particularly in times of market distress, and investors and investment managers alike were often surprised when suffering losses greater than those predicted by their risk models.

In a hair shampoo advert this could easily be ‘the science bit’, but rather than induce sleep by formula, I’ll just say that we flipped many of the dynamics of academic models to create our own, proven, asset allocation methodology to produce more efficient risk adjusted returns, and more importantly provide the kind of downside protection investors expect for their level of risk.

We were also keen to return to an environment where direct equity research was key, substantial and wide ranging. We now employ a team of expert investment analysts who perform in-depth equity research, using our own forecast modelling and proprietary valuation techniques on over 500 UK stocks. This enables us to identify and invest in the most attractive companies, across the entire market spectrum for our clients, at any given time.

Although I have summarised Vertem’s beginnings, our own asset allocation methodology and direct stock research became, and remains, the foundations of our investment process. The next stage involved attracting new clients. We were aware that the IFA industry was often served by investment managers, however, not all were providing the same level of service. Therefore, we consciously decided to develop services and relationships that could enhance the IFAs’ own propositions, tailored to their individual needs rather than on an ‘off the shelf basis’. When we first started, we’d often say to prospective clients ‘If we had a brochure it would be blank, we’d give it to you and ask you what it needs to say inside to meet your needs’.

From a complete standing start we have made great strides via introducers and have created a national client base. However, we are a North East business that believes its proposition is very strong in the region, and therefore in recent months we have extended our offering to charities, trusts and most recently, directly to individuals. The latter is solely delivered via stockbroking or direct stock-based portfolios and services which would otherwise be unavailable via an IFA, and thus ensures we aren’t cannibalising our existing client base and introducers.

We are very proud of the progress we have made, not only commercially, but also in terms of the success of our investments. With plenty planned for the future and some exciting growth still to come, we feel it’s still just the start of the Vertem journey.


*Advertising feature.

Scroll to next article
Go to

It’s good to share