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Financial Services Newsletter - Friday 3rd May 2019

02 May 2019

Market News

Restricted advice firm St James's Place (SJP) has seen a slight slowdown in net inflows despite its total Assets Under Management (AUM) reaching a new record high. For the three months ending 31 March, SJP’s net inflows were at £2.2 billion, which was £400 million lower than the same quarter in 2018 when they were at £2.6 billion. Gross inflows were also down slightly at £3.6 billion compared to £3.9 billion in Q1 2018. Although this represents only a modest slowdown in growth, SJP has previously expanded massively quarter-on-quarter. Last year its Chief Executive said the firm could grow by 15-20% each year.

Sanlam UK has bought out the Wealth and Planning businesses of Thesis Asset Management and will integrate its four-strong South East England branch network into its national chain. Sanlam Chief Executive Jonathan Polin said: ‘Thesis is a high-quality business and an important strategic fit for Sanlam in the UK. The entire Sanlam family is looking forward to welcoming our new colleagues.’

In other news, Sanlam has bought Newcastle-based IFA Blackett Walker, in a deal that will add a specialist advice company for medical staff to Sanlam's business. The acquisition, for an undisclosed fee, will see five Financial Advisers who currently advise 1,000 clients join Sanlam. As part of the acquisition, Sanlam will also take over Blackett Walker Medical, which specialises in offering Financial Advice to medical professionals. John White, Chief Executive of Sanlam's UK Wealth arm, said there were similarities between the two companies before the acquisition was agreed.

Cheshire-based Equilibrium Asset Management aims to raise £1 million via its charitable foundation by 2028. Established in 2010, the firm’s foundation initially aimed to raise £250,000 by the end of 2020. The company has comfortably surpassed that target and is now aiming higher. To date the foundation has raised over £280,000 to support causes including Age UK, Cancer Research and local Hospices. For these efforts and others, Equilibrium won a Corporate Social Responsibility award at the 2019 Greater Manchester Business Awards. Managing partner Gaynor Rigby said the importance of charitable activity was a core part of the firm’s culture. ‘Giving back is part of the very fabric of Equilibrium,’ she said. ‘We do a lot of work through the foundation and always emphasise the importance of charity work to the team.’

Asset management giants UBS and Deutsche Bank are in talks about a possible merger. The two companies are in 'serious' talks about a deal that would create one of Europe's largest investment companies with more than £1 trillion of assets.

Rowley Turton has joined Leicestershire County Cricket Club’s 1879 Business Club. The 1879 Club was formed in 2015 and provides local businesses with advertising at Leicestershire’s Fischer County Ground for Vitality Blast fixtures, Specsavers County Championship games and Royal London One-Day Cup matches. For the £1,500 price tag, sponsors also receive two match tickets to watch a selected England international match and social media exposure. Tracey Branson, Corporate Partnerships Manager for the club, said: ‘We are extremely happy to have Rowley Turton on board at the Fischer County Ground as a new member of the 1879 Club. It is a well-known and highly respected company within Leicester and will be a welcome addition to our business club.’

Last month US-based Financial Planning guru Michael Kitces told advice firms they should consider charging £150 a month to serve millennial clients. Although some people dismissed the idea, many Advisers said they would be willing to embrace a subscription charging model. One company, Nottingham-based Neon Financial Planning, already charges a subscription fee of £40 a month for an ongoing service that includes Financial Coaching and access to its savings app. Williams Robins spoke to Neon Managing Director Rebecca Aldridge, also Managing Director of Balance: Wealth Planning and Jon Page, Neon director and Financial Planner and a Paraplanner at Balance. Together they set up Neon in 2018.

National advice firm Succession Wealth has been given access to over £100 million from private equity backers to fund a raft of advice firm acquisitions. In 2014 Inflexion Private Equity purchased 50.1% of shares in the group to provide funding for Succession's acquisitions of its member firms. At the time then chief executive Simon Chamberlain had set a goal of buying 50 firms by the end of 2017, accumulate £7 billion assets for the platform business and float or sell by the end of 2018. However Succession has been through upheaval in subsequent years.

Quilter reported net inflows of £500 million in the first quarter, which helped push up assets under management and administration by 5.1% to £114.9 billion. The figures exclude subsidiary Quilter Life Assurance, which the group said saw outflows of £0.9 billion, albeit in a ‘deliberate run-off book’. The company also said it is taking a more cautious approach to Pension Transfer business, with inflows from defined benefit to defined contribution arrangements falling from £0.6 billion to £0.2 billion year-on-year.

In other news, Quilter is set to buy National Advice Business and Network Lighthouse after putting in a bid that values the AIM-listed company at £46 million. Lighthouse has recommended its shareholders unanimously accept the offer from Quilter. Shareholders will be paid £42.2 million, with the rest of Quilter's valuation coming from £4 million of cash currently held on Lighthouse's balance sheet. Advisers in both Lighthouse's National Advice Business and Network will join Quilter-owned network Intrinsic following the acquisition. This could add another 400 advisers to Quilter's ever growing advice business.

Over three-quarters of Advisers believe there will be a shift to a subscription fee model in the UK, according to a survey by Octopus Investments. The poll, which surveyed 275 advisers last December, found 77% thought the UK Advice market would eventually move to a subscription system where customers pay a fixed monthly fee for advice. This approach is gaining traction in the US, where one of the largest Robo-Advisers Charles Schwab recently moved from an asset-based fee to a $30 (£23) per-month charge. However despite many being behind the subscription model, the Octopus survey found most believe it is still a way off becoming a reality, with the majority (60%) of Advisers believing it would take five years or more to happen.

Losses at Advice and Wealth Management firm Kingswood blew out from £1 million to £3 million last year as an ongoing restructuring caused an £800,000 drag on revenue and ‘senior staff departure’ costs cost a further £500,000. The balance sheet was further hit by a £1 million cost associated with the recognition of borrowing on the company books and with the expense of the 2017 takeover of the debt-laden European Wealth business from its former Executives, as they struggled to remain current on a loan. Kingswood had earlier this month issued a profit warning as ‘a result of additional investment expenditure’. Shares, which fell 3.8% to a record low of 10p following the announcement, were this morning unchanged on the day at 8.1p.

Brewin Dolphin is in ‘exclusive discussions’ to acquire Investec’s Wealth Management business in Ireland. Following a report, Brewin Dolphin confirmed in a statement it is in talks to acquire the Irish Stockbroking business. ‘Discussions are ongoing and there can be no certainty that a transaction will be agreed,’ the statement added. The deal could be worth around €60 million (£51.8 million). The report also said Brewin Dolphin is competing with Rathbones and Allied Irish Banks for the deal. If the acquisition does go ahead, it would follow Brewin Dolphin’s acquisition of Irish Private Client firm Tilman Asset Management in 2011.

Tilney is on the lookout for acquisition opportunities after spending £16 million on improving its technology systems. The investment was spread across the last two years, with the aim of enhancing client service and improving operational efficiency. Key to this was the migration of client portfolios and processes to Iress Xplan last year, meaning the entire Tilney business is operating off an integrated Wealth Management technology platform.

XPS Pensions Group has bought RL Corporate Pension Services Limited from The Royal London Mutual Insurance Society. RLCPS provides Pensions Actuarial, Consulting and Administration Services to 150 smaller defined benefit Pensions schemes, covering 8,000 scheme members. XPS says the acquisition will strengthen its presence in the market for provision of full services to smaller DB Pension schemes. The firm said the purchase was in line with its “continued focus to become the pre-eminent Pensions consultancy in the UK and strengthens XPS’s capability in delivering a tailored service suitable for the whole spectrum of DB schemes, from small to very large”. 


Market Movers and Shakers

Brewin Dolphin has bought Bath-based IFA Epoch Wealth Management, in a deal which will add around £500 million in assets. Epoch Wealth Managing Director Barry Newbury will join Brewin Dolphin alongside 37 other staff members.

In other news, Brewin Dolphin has appointed another new Wealth Director to its West End branch as it continues to expand its 1762 advice offering following a spate of recent hires. Anthony Rawlinson joins from Coutts & Co, where he worked for seven years as a Discretionary Portfolio Manager. He was previously Head of Private Banking for Standard Chartered in Abu Dhabi. He started his career at N M Rothschild & Sons in London.

Mattioli Woods has made a key Senior hire and has recruited Sean McSweeney to strengthen their Employee Benefits proposition. Sean was previously as Chase de Vere in Manchester.

Charles Stanley has brought in three new hires as it continues an ongoing campaign to boost resources in its Financial Planning business. Tom De Burgh Williams joins as a Chartered Financial Planner, covering the Bath and Bristol businesses. Before joining Charles Stanley, he was Head of Wealth Planning for the south west at WH Ireland. Joining as a Chartered Financial Planner in the Norwich office is Gary Coe, following a six-year stretch at Wealth at Work, where he was most recently a Senior Wealth Management Adviser. He previously worked as an Adviser at Lloyds and Barclays. Luke Keattch joins the Bath office as a Paraplanner. Keattch was previously at WH Ireland and holds the DipFA Level 4 qualification in Financial Advice.

Tilney multi-asset Portfolio Manager Bo Huang has left the firm two years after she joined via its acquisition of Towry. Huang joined Tilney in 2016 as a member of the £5 billion multi-asset team, part of the firm’s core Investment Management service. Huang, who featured in both Wealth Manager’s 2018 and 2017 Top 100 power lists of UK Fund Buyers, joined Towry as Co-Portfolio Manager of Discretionary and Advisory Portfolios in 2015. Tilney Chief Investment Officer Chris Godding said: ‘I would like to take this opportunity to thank Bo for her contribution to the team and wish her success in her future endeavours.’

Sanlam’s Advice Partnership Chief Alex Morley has left the business. Morley has led Sanlam’s Financial Advice arm since February 2014, when he took over from Nigel Speirs as Wealth Planning Chief Executive. In 2017 John White took over as Chief Executive of the Wealth and Planning business, while Morley took over the newly created Advice Partnership business.

Quilter Cheviot continues at pace to plug the void left by the exit of raft of Wealth Managers last year. In the latest round of hires, the firm has recruited four Investment Managers from its rivals. The hires include Brooks Macdonald Investment Director Richard Wayne-Wynne, who joins the firm's London office. Quilter Cheviot has also hired WH Ireland Bristol Head Nick Lamb for a Wealth Manager role at its base in the south western City. Charles Stanley investment Manager Daniel Schieber and GHC Capital Markets' Martin Andrews complete the quadruple hire. They join Quilter Cheviot's Salisbury and Leicester offices respectively.


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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