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Financial Services Newsletter - Friday 4th October 2019

04 Oct 2019

Market News

Last year’s announcement that Lloyds was joining forces with Schroders to launch an advice business, aiming to be top-three for assets by 2023, was a hammer bolt for the financial advice market. Consolidators, nationals and networks up and down the land quickly realised a new competitor was joining their ranks and one with some serious backing. But almost one year on from its unveiling, it has not all been plain sailing for the two FTSE 100 giants. Last week the FT reported the venture, named Schroders Personal Wealth, has been hit with tech issues following the migration of money and staff onto new systems.

Schroders Personal Wealth has promised to open up a major front in an asset management price war, saying it will aim to undercut the pricing of major high street rivals by as much as 50%. The joint venture between Schroders and Lloyds, which launched to clients of the bank this summer and which will begin offering services to new clients this autumn appeared to take direct aim at St James’s Place, according to documents seen by the FT. The house’s fee strategy estimated first-year client fees, inclusive of all account set up costs and administrative and trading charges, to run at an average of 7.9% at SJP and 4.7% at Brewin Dolphin. It believes it can offer an equivalent service for 3.6%.

JM Finn has opened an office in Winchester, with the five Managers to be based in the city running more than £700 million at launch. The team will be headed by Director Simon Tufnell and will look after around 1,500 clients from the outset. Tufnell, who lives locally, highlighted the appeal of the office to clients who live in the region, but who had previously gone to London for meetings. He also flagged the quality of intermediaries in the city.

Online Financial Adviser Open Money is expanding into mortgage advice in a bid to become a “one-stop shop for people’s financial affairs”. The firm’s home buying service will launch next year, initially limited to first-time buyers. Advice will cover building a deposit, arrangement and repayment. It will also advise on insurance and mortgage protection and provide links to conveyancing services.

Brooks Macdonald won muted plaudits for a solid, if largely unspectacular, set of annual results. The company is now moving back into expansion mode after a period of streamlining and consolidation. The firm’s full-year numbers revealed headline profits rose 11.8% to £21 million over the year to the end of June, with its profit margin edging up 0.8% to 19.6% on a 7.3% increase in revenue to £107.3 million. Brooks’ recent problems are gradually moving into the rear-view mirror. No addition is expected to the £12 million provision already set aside for legacy issues within the Spearpoint business it acquired in 2012.

Julius Baer International’s full-year accounts reveal that the company required an £8 million capital injection from its parent group to help fund the launch of its UK regional business last year. The ambitious growth strategy, which saw the private bank go on a significant recruitment drive as it opened offices in Manchester, Leeds and Edinburgh, pushed the firm into a £793,000 loss last year, compared to a £9 million profit in 2017. The loss would have been higher, but was in part offset by £5.2 million proceeds from the sale of its Dublin office to its parent group last year.

Profits at RWC Partners climbed more than a third to £9 million last year as the firm pressed on with a wholesale overhaul of its tech systems. The 34% rise followed an increase in income from £75.4 million to £79.9 million. Lower performance fees were offset by higher management fees highlighting the ‘changing shape’ of the business. The company has recently switched tech providers, handing the contract for its middle office to Charles River.

Following the recent acquisition of Plan for Life Wealth Management Clifton has agreed to acquire Leonard Gold Financial Management. Leonard Gold, based in Southsea, was originally part of Leonard Gold Chartered Accountants. It will initially join the Clifton Wealth Partnership as an appointed representative with an agreed downstream purchase to take place in 2021. In June, Clifton launched its Clifton Wealth Partnership to allow smaller advisory firms to compete with larger rivals by providing access to services and products under the Clifton umbrella.

Standard Life's Elevate and Wrap platforms picked up two of the big accolades at last night's 2019 Schroders UK Platform Awards, with Parmenion taking home the Platform of the Year title. Standard Life Elevate - the platform it bought from Axa back in 2016 - won the award for Best Platform Provider (up to £25bn AUA), while its Wrap proposition won Best Platform Provider (over £25bn AUA). 

Ascot Lloyd has added £415 million of assets with the acquisition of two advice firms, including Prest Financial Planning. The deals come two years after Ascot Lloyd merged with consolidator Bellpenny in a £10 million deal that formed a national advice business with £6 billion of assets under advice. Last year the company removed Bellpenny from its name and committed to offering independent advice. Prest Financial Planning will bring 6 Advisers to Ascot Lloyd, as well as £3 million of revenues. 

The Financial Conduct Authority (FCA) has fined Prudential £23.9 million over failures related to non-advised sales of annuities. According to the regulator, between 2008 and 2017 Prudential's annuity sales force failed to inform existing customers they might get a better deal by shopping around other providers. This contravened FCA rules about making customers aware of better offers across the market. 'Prudential was aware that many customers could get a higher income in retirement by shopping around on the open market,' the regulator said. 

Consolidator AFH has put the brakes on IFA acquisitions, blaming market uncertainty, after buying 50 firms over its five years on the AIM market. Amid what it describes as an ‘uncertain political and economic climate’, AFH said it will focus only on ‘organic’ growth once a pipeline of acquisitions has been completed. This year AFH has bought seven financial advice businesses, at a cost of £29.9 million, which £12.8 million has already been paid as initial consideration. AFH spent £10 million of this since July when it raised £15 million in a placing and will now only pursue buying opportunities identified at that time.

Three bosses at national advice firm Tavistock have entered into a £630,000 loan facility agreement with the national advice firm just a year after the company broke into profit. In a trading update, Tavistock said that it was trading ‘in line with market expectations, despite challenging market conditions caused by political instability, anxieties over Brexit outcomes and international trade disputes.’ However, it also detailed specifics on a new loan facility provided by Directors Oliver Cooke and Brian Raven, alongside Chief Investment Officer Christopher Peel. 

Bad defined benefit (DB) transfer advice from some firms may lead to claims management companies (CMCs) targeting all advisers who have recommended pension transfers, Tenet's Group Risk and Regulatory Director has claimed. Caroline Bradley said that even Advisers who have done the right thing by their clients may be faced with complaints in future years and added that personalised, ongoing client relationships were key to advice businesses' defence case should CMCs ever come knocking. 

Financial Planners could soon have a brand-new professional body to rally behind, as a group of Advisers put their backing behind an Institute of Financial Wellbeing. A group of 26 familiar faces from the world of financial planning and advice have put their names to the proposal, including former Institute of Financial Planning Director Phil Billingham and ex-IFP President Julie Lord; Red Circle Financial Planning (Darren Cooke) and Cervello Financial Planning (Chris Daems); alongside other prominent figures in the profession like Richard Allum, Managing Director of The Paraplanners, and Alan Smith, Chief Executive of Capital Asset Management. The initiative is being led by Chris Budd, Chairman of Ovation Finance, who held the first Financial Wellbeing Conference in Bristol earlier this year, which he said had generated ‘huge interest’.

Peter Hargreaves is considering upping his stake in Blue Whale Growth after a strong first two years for the fund delivered the Hargreaves Lansdown Co-Founder a £10 million gain on his £25 million investment. Hargreaves backed the launch of fund group Blue Whale Capital, set up by former Artemis Fund Manager Stephen Yiu and invested in its only fund at its launch in September 2017. Two years on, the £210 million fund is up 41% and is second only to the £9 billion Lindsell Train Global Equity fund, up 45% over the same period, in the Investment Association's Global sector. The UK's largest fund, the £19 billion Fundsmith Equity, returned 35% over the last two years.

Online investment business Nutmeg has launched a financial planning service. Nutmeg started making regulated financial advice available to its users towards the end of 2018, but is now giving its customers a choice to opt for a financial planning service too. The financial plan will cost £275 (including VAT) compared to its advice service which costs £575 (inc. VAT). The planning service ‘provides guidance and observations about your current financial situation and your expected cashflows, to help you better understand what your financial future could be.

Aviva Investors has launched its 2020 returnship programme, aimed at helping people return to work after an extended break. Return to Work is a six-month placement in which this year up to 10 people, with help from internal and external coaches and mentors, work to complete a specific project for the asset management arm. It is aimed at mid-to-senior level professionals who have previous experience in financial services.

Bristol-based financial planning firm Paradigm Norton is launching a ‘leadership academy’ with the University of the West of England (UWE). The one-year course will be run exclusively for Paradigm Norton’s IFAs and will focus on teaching essential ‘soft skills’ such as management and leadership. The course will initially run for one year, with a dissertation-type assignment set over the final three months. Those who complete the course will receive an accredited certificate of leadership and management from UWE, as well as credits towards completing a further two years to achieve an MBA at the university, if they choose to do so.

Tilney has agreed a £625 million deal to merge with Smith & Williamson, creating a national advice business with 260 Advisers. The merged business, which is to be called Tilney Smith & Williamson, will have £45 billion of assets. According to Tilney the two businesses have combined revenues of £500 million. Shareholders in Smith & Williamson will receive £625 million. This will be paid through an initial cash consideration as well as shares in the merged company. 

The NextGen Planners training contract offers firms looking to develop young talent two options: a 20-month course resulting in level 4 accrediation, which will cost a firm £5,000 plus VAT or a 30-month course taking recruits all the way to level 6, costing £8,000 plus VAT. It has been less than a year since its launch, but the programme is already inundated with applications from hopeful trainees. We recently caught up with Xentum Managing Director and NextGen Planners Co-Founder Adam Carolan to hear how the project is progressing and why he thinks the contract offers more than what many academies provide.


Market Movers and Shakers

Investec Wealth & Investment (IW&I) has tapped Brewin Dolphin's Bournemouth office for the second time in three months. Hannah Dampney will join Investec's local office as a Senior Investment Manager. She spent eight years at Brewin, where she held the same title, having previously served as Assistant Director for the firm's Lymington office until 2014. She previously worked at Charles Stanley. Earlier this summer the company's local office hired Alistair Cannings from Brewin as an Investment Manager.

Sanlam UK has hired eight as it strengthens its regional financial planning teams in London, Bristol, Preston and Fareham. Chief Executive of Sanlam Wealth John White said: 'These new hires underline our commitment to growth and support our regional offering". Sarb Chahal joins the London office as a Senior Wealth Planner from Tideway Investment Partners. He was appointed alongside Paul Johncock, who joins as Senior Planner from Close Brothers, while Jean-Michel Morelli joins from St. James's Place (SJP)  as Planner. Stuart Arnold joins the Bristol office from Charles Darby as Senior Wealth Planner, alongside Chris Halliwell, who joins from Create Financial Planning as Planner. In Preston, Mike Walker joins from Prest Financial while Jamie Reed joins from specialist sports wealth planner Pitch UK, both as Planners. Finally, Paul Cadman joins from NFU Mutual as a Senior Wealth Planner in Fareham.

In further news...Sanlam UK has appointed Alex Knott as Chief Technology Officer as it looks to enhance its digital business. Knott brings a wealth of technology experience with him, most recently serving as Head of IT solutions for the Tilney Group, where he lead a team of 50 across multiple disciplines, including software development, product & solutions, data services, business migration and digitial delivery.

Johnston Financial, based in Edinburgh’s New Town, has appointed Steve Rowntree as a Financial Planner. He joined from Carbon Financial where he has spent 12 years. Rowntree’s move to Johnston Financial came as the firm completed a two-year MBO, which will see Founder and Chairman Adrian Johnston relinquish his remaining 27% in the company as he winds down to retirement.

Intelliflo has revealed that Nick Eatock has returned as Chief Executive following the departure of Hamish Purdey. Mr Purdey was said to be leaving the firm immediately “to pursue new challenges”. He joined Intelliflo in November 2014, at which time Mr Eatock took on the role as Executive Chairman.

Charles Stanley has appointed Louise Fletcher to head its middle office functions in a 'critical' appointment in its current business restructure. Fletcher had previously worked with Charles Stanley as an external Consultant and will join in a newly created role.

Walker Crips has appointed Head of Structured Investment Nick Hansen to Chief Executive of investment management as it overhauls its business model and products to appeal to a new generation of clients. Hansen, who has worked at the business since 2007 and served on the board since 2010, replaces CEO Sean Lam, who took over in 2017 following the exit of predecessor Mark Rushton. Lam will remain as Group Chief Executive.

The Chief Executive of Close Brothers has announced his resignation as the company's profitability warnings in its asset management arm materialised amid "challenging" market conditions and a costly hiring spree. Preben Prebensen is resigning after ten years in the role. In a statement to the market the company confirmed he would be moving on to the "next stage in his career", but would remain with Close Brothers for the coming 12 months as the firm begins its search for a successor.

In further news...Close Brothers has poached a Deutsche Bank Managing Director to head its marketing and business development capability as the firm's hiring spree shows no signs of slowing down. Matthew Spencer will support the firm's growth ambitions in his new capacity, taking on several responsibilities, including private clients and intermediaries.

Brown Shipley's Deputy Chief Investment Officer and Wealth Manager Top 100 star Alex Brandreth has resigned from the company, Wealth Manager understands. Brown Shipley declined to comment. It was not immediately clear who would replace him in the role. Brandreth joined the company in 2010 as a Deputy Fund Manager in its multi asset division. He became Head of Structured Products in 2015 and Deputy Chief Investment Officer a year later, following Don Smith on his promotion to CIO.

Five executives have agreed to step down from the board of boutique investment manager McInroy and Wood Portfolios, as the firm looks to align itself with Financial Conduct Authority (FCA) governance recommendations. The wholly-owned subsidiary of McInroy and Wood Personal Investment Managers announced a flurry of board resignations last week, as it sought to meet requirements from the regulator’s Asset Management Market Study.

Ian O’Dowd has joined Quilter Private Client Advisers as a Financial Planner from Pavey Group in Exeter.

Kirsty Stone has joined The Private Office as a from Dart Capital as an Advisor in London.

Fin tech firm, Open money have entered the mortgage space and have recruited James Brocklebank, who will head up the business from their Manchester Head Quarters.

Sharon Crumpton is joining ACA Compliance Group in Birmingham as their Principle Consultant as ACA expand their midlands business.

Scottish Widows has appointed Graeme Bold as Director of Workplace Pensions. The firm says Mr Bold will lead development of the workplace strategy to market, the provider’s Group Personal Pension and Master Trust propositions, as well as playing a key role in delivering its broader Financial Planning and retirement strategy. He joined from M&G Prudential and was previously Strategy Director at Standard Life Aberdeen, as well has having held a number of roles in Standard Life including leading the workplace pension proposition and workplace client services and operations.

Scottish Widows has appointed Graeme Bold as director of Workplace Pensions. The firm says Mr Bold will lead development of the workplace strategy to market, the provider’s Group Personal Pension and Master Trust propositions, as well as playing a key role in delivering its broader Financial Planning and retirement strategy. He joined from M&G Prudential and was previously strategy director at Standard Life Aberdeen, as well has having held a number of roles in Standard Life including leading the workplace pension proposition and workplace client services and operations.
Adam Owen DipPFS, Certs CII (MP & ER) has been confirmed as President of the Personal Finance Society (PFS). Mr Owen, who takes over the role from John White, is currently Curriculum and Training Director at NextGen Planners. He joined the profession in the mid-1990s and has held advisory roles within direct sales and the IFA sector and provided technical compliance support to both DA firms and networks. He was a Founding Director of support provider EQI Consultancy and has held a variety of senior compliance and supervision positions. More recently, he has focused on developing career pathways throughout the profession, becoming a CII and PFS-accredited Trainer.

AJ Bell has appointed Rachel Vahey to the role of Senior Technical Consultant. Ms Vahey, who will start the role on 30 September, is pension expert with over 25 years of experience within the industry. The firm says that, as part of the technical team, she will help Financial Advisers understand the changing pensions and savings environment and how new legislation and regulation affects them and their clients. She will feature regularly as a speaker at AJ Bell’s events and seminars for Advisers as well as writing content and articles for AJ Bell’s website. 

Royal Bank of Scotland (RBS) has appointed Alison Rose as successor to outgoing Chief Executive Ross McEwan. RBS has confirmed the appointment in a market announcement, following repeated speculation in the national press last month. She is the company’s first female Chief Executive. RBS chairman Howard Davies said he was ‘confident’ that the business’s board had made the right appointment.

The Financial Conduct Authority (FCA) has appointed ex-Royal Bank of Scotland (RBS) Director Sheree Howard as the new Executive Director of its risk and compliance oversight (R&CO) division. Howard will replace ex-Director Barbara Frohn who left the FCA earlier this year. Howard is currently interim Director of the FCA's R&CO team and formerly held the position of Director at the advisory, commercial and private banking, conduct and regulatory affairs division at RBS before being appointed as an FCA special adviser in December 2017.


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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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