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Financial Services Newsletter - Friday 10th January 2020

10 Jan 2020

Smith & Williamson is to cut off half of its shareholders as it merges into Tilney in a decision that will force smaller holders of the stock to liquidate their stakes in the company. The move means many holders will face capital gains tax (CGT) liabilities, with documents showing that backers will have to take the first £45,000 of their stake in cash. This means that half of S&W’s 1,200 owners, including current and former employees, will be left without any shares in the new merged company.

US asset management giant Vanguard is set to enter the UK advice market after it has obtained regulatory approval from the Financial Conduct Authority (FCA). In a message to clients, Vanguard’s head of Europe Sean Hagerty revealed the fund manager has obtained approval from the FCA to provide retail advice and is ‘exploring the launch of a direct to consumer financial advice offer in the UK’.

Redemptions by Speirs & Jeffrey clients and the loss of some pension and other institutional mandates weighed on asset gathering at Rathbone Brothers last year with the house adding just £600m. That compared to the 2018 total of £8.5bn, lifted by the addition of £6.8bn in assets managed by Speirs & Jeffrey. The loss of private client assets was deep enough to cancel out the £943m gathered by the company’s unit trust division, headed by Mike Webb, up from £543m in the prior year.

St James’s Place (SJP) has replaced Janus Henderson Investors as Managers of its Global Emerging Markets fund with Somerset Capital Management. Somerset Capital, a global emerging markets investment management firm, was co-founded by politician Jacob Rees-Mogg, who was an Adviser at the firm before he left to take up the position of leader of the House of Commons in Prime Minister Boris Johnson’s new cabinet last July.

Concerns about the firm’s culture, pressure to use its own platform and a loss of faith in the value of their shares resulted in over 20 Advisers leaving Succession in 2019. The private-equity backed-consolidator, now run by Chief Executive James Stevenson, has been hit by a string of Adviser departures, in addition to a round of redundancies and senior figures leaving.

In further news, national advice firm Succession has cut around 40 jobs in a round of redundancies, with a number of senior people also exiting the business. According to four sources familiar with the matter, 30 to 40 individuals at Succession were made redundant between the end October and November. These roles were across sales support, business development and a number of Director positions.

Star Fund Manager Terry Smith has bagged £16.2 million after his Fundsmith business generated record profits of £26.4 million in the year his Fundsmith Equity fund was crowned the UK's largest. But the ballooning payments from Fundsmith's UK-based company to its Mauritius outpost means that does not give the full picture of the profits generated by Citywire AAA-rated Smith's fund business and his own personal wealth.

National advice firms are being forced to cut ties with self-employed advisers in favour of full-time employees ahead of planned reforms to IR35 legislation in April. HM Revenue & Customs (HMRC) is set to extend its IR35 off-payroll legislation to include the private sector in April this year.

Neil Woodford and his Chief Executive Craig Newman received £13.8 million of dividends in 12 months leading up to the crisis that engulfed Woodford Investment Management, accounts for the business show. Those dividends, revealed in filings lodged with Companies House, were paid to Woodford Capital, owned by Woodford and his Business Partner Craig Newman. The 65% to 35% ownership split between the Fund Manager and his Chief Executive entitles Woodford to £9 million of the payout and Newman to £4.8 million. The payouts were generated by profits after tax of £16.3 million over the year to the end of March.

Private equity firm CBPE Capital has made a 'major investment' in advice consolidator Perspective Financial Group. In July, Perspective was looking for potential private equity suitors for what it hoped was a £50-£60 million valuation and sale of the national business.

As 2019 drew to a close the Financial Conduct Authority (FCA) delivered its latest policy statement as part of its Platform Market Study. While it disappointed by kicking the exit fees debate down the road into 2020, it did produce some interesting thoughts that may have been missed around how transferring between platforms can be made easier for consumers. Specifically the FCA said platforms must offer ‘in-specie’ transfers to ensure customers stay invested throughout the process. However, it continues to look to the industry for innovation for the solutions, particularly where ‘in-specie’ transfers may not be possible due to share classes not being shared across the relevant parties.

Quilter has completed the sale of its heritage life and pensions business to ReAssure for £445 million. The business confirmed the deal to the stock exchange, having originally outlined its intention to sell the arm in July last year. A month later it followed through with details of the buyer in August. The total cash consideration for the business was £445 million, 'representing the agreed cash consideration of £425 million together with accrued interest payable under the sale agreement up to the completion date of [circa] £20 million,' Quilter said.

Former Institute of Financial Planning (IFP) Chief Executive Nick Cann has been recognised in the New Year's Honours list with a British Empire Medal for his work supporting stroke survivors. Cann served as head of the IFP from 1999 to 2015, but very sadly suffered a life-changing stroke in 2013. He had been giving a lecture to students in Northampton when he collapsed and was rushed to hospital. Cann still suffers from aphasia, a speech and comprehension impediment that results from severe brain injuries.

Private equity has swooped on AIM-listed financial advice firm Harwood Wealth Management. Carylyle, which is one of the UK’s leading Private Equity businesses, backing well-know names like private hire car company Addison Lee, is to buy Harwood via a newly-created company. The deal values Harwood at just over £90.7 million

National advice firm Mattioli Woods has bought Turris Partnership in a deal worth up to £1.6 million. Glasgow-based Turris, run by Managing Director Brian Steeples, currently has £65 million of assets under advice and in the year ending 30 September recorded a pre-tax profit of £150,000.

Nick Train has bought shares in PZ Cussons (PZC) as the Citywire AA-rated Fund Manager builds a new stake in a UK-listed company for the first time in nine years. His Lindsell Train fund group has amassed a stake worth £12.2 million, representing 1.6% of the FTSE 250 consumer goods company's shares, according to Refinitiv data.

Consolidator Fairstone has acquired Stockton-on-Tees-based Chilli Financial Limited. The deal will bring around 400 clients, two Advisers and three additional staff to Fairstone. The total fee income secured by the agreement is £600,000 on £80 million of funds under management.

The Financial Services Compensation Scheme (FSCS) has warned it expects to impose a supplementary levy on advisers of £46 million after a surge in bad pension advice. In a statement, the FSCS said it ‘expects’ to raise the additional levy from the Life Distribution, Pensions and Investment Intermediation class after it has received £20 million more in pensions claims than expected this year and with the collapse of a number of investment firms.

National restricted advice group St James's Place (SJP) has bought the independent advice business it uses to serve clients with non-SJP legacy products. Since 2002 Linlithgow-based advice firm Policy Services has advised clients of firms acquired by SJP who have products that fall outside of its Advisers' restrictions.


Parmenion revealed that its chief investment strategist, Simon Brett, is to retire in September 2020 following 12 years at the firm. Brett will be replaced by current head of investment solutions Tom Sayers, who joined in August from Bristol rival Whitechurch Securities.

Asquire Wealth Management has appointed former Quilter Cheviot Chief Executive David Loudon as a Non-Executive Director. Loudon joined Quilter in 1993 and headed the wealth giant between 2015 and 2017 when he announced his retirement from the industry after a 40 year career.

Redmayne Bentley has hired Charles Stanley's Kate Spurling as an Investment Manager in its Bournemouth and Poole office. Spurling joins from local rival Charles Stanley’s Dorchester office.

The sole remaining founder of Seven Investment Management Justin Urquhart Stewart is set to step back to take an 'ambassadorial' position. Urquhart Stewart, currently Head of Corporate Development at the firm, will relinquish full-time responsibilities at the business in January. He was one of seven original Founders who set up the firm in 2002 and is the latest to take a step back, after Chief Financial Officer Charles Sparrow announced he would be exiting on 4 April next year.

The Financial Conduct Authority (FCA) will need a new Chief Executive after Andrew Bailey was appointed Governor of the Bank of England. Bailey was announced as Mark Carney's successor by chancellor Sajid Javid.

Ian Taylor, Co-Founder and Chief Executive of specialist platform provider Transact is stepping down from the role, which will now be split between plc and operations.

Mike Clarke has left Prudential to join Fidelius to bolster their management team across the south east. Mike will be looking after a team of Financial Planners and is tasked with growing the team moving forwards

Simon O’Connell has joined Tilney Group in Maidstone, he joins from LEBC where he was part of a team of Chartered Financial Planners, Simon has a strong background within Financial Planning and his experience will no doubt be of value to Tilney.

LV=’s Chief Executive Richard Rowney is leaving the business, the Insurer have announced.

The Ellis Bates Group has bolstered their team with Rachael Dowde as a Head of Academy. Based in Harrogate she will be running the learning and development programmes across their offices to assist in growing the next generation of Advisers.

Close Brothers Asset Management (CBAM) has appointed a Business Development Director to bolster its connections with lawyers, accountants and other service providers. Sarah Keltie joins the firm from Taylor Wessing as a Senior Investment Business Development Director.




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All information provided in this Market Digest has been gathered from multiple Financial Services Media sources and individual company press releases.

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