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Financial Services Newsletter - Friday 6th September 2019

06 Sep 2019

Market News

News of LEBC’s defined benefit (DB) transfer shuttering after a knock on the door by the Financial Conduct Authority (FCA) has been one of the more surprising twists to come out after the regulator’s DB transfer market review. LEBC is a national, independent firm in favour of affordability and transparency – trying to provide flat-fee advice options for consumers while using its scale to squeeze costs. And LEBC was in full agreement with the regulator's mooted plan to ban contingent charging. In July Ingram said contingent charging structures used by many firms were not in consumers' best interests and she has provided evidence to MPs to this effect. So it might be safe to rule out issues with conflicts of interest in its charges as a reason for it to stop new transfer business.

Premier Asset Management and Miton Group have announced a merger. The deal will create a business, Premier Miton Group, with £11.5 billion of assets under management. The businesses said it will combine Premier’s outcome-based multi-asset strategies with Miton’s specialism for single active strategies. It is hoped the deal will delivering significant economies of scale and shore up their balance sheets. Premier and Miton said they expect pre-tax cost savings of approximately £7 million per annum.

Vertically integrated Wealth Manager Mattioli Woods has seen a slight dip in revenue as clients slowed their investments amid uncertain market conditions. Financial statements show Mattioli Woods’ revenue fell from £58.7 million in 2018 to £58.5 million for the 12 months ending 31 May 2019. This was driven by ‘reduced levels of investment by clients’, the group said. Despite this, Mattioli Woods, which offers financial planning, wealth management and Sipp administration, saw its operating profit before financing up 2.1% to £9.8 million.

Scottish Widows and Aegon are leading the race for Zurich’s wrap platform, which has been put up for sale by the life company. In July Zurich was seeking bidders for its adviser platform, with HSBC appointed to help it find a buyer of around £50 million. A source familiar with the situation has said the deadline for bids for the platform is the middle of September and a deal could be completed shortly after that. The two providers currently in talks for the platform are Scottish Widows and Aegon. It is understood bids could be in the £70 million region.

The Financial Conduct Authority has warned that scammers are impersonating wealth management group Close Brothers. In a statement on its website, the regulator said the unauthorised clone firm is going under the name of Close Brothers Limited. It has been using the UK phone numbers 020 3370 1818 and 020 3318 1207, as well as email addresses admin@closebrothers.com and davidwestbrook@closebrothers.com. The FCA said: ‘This firm is not authorised or registered by us but has been targeting people in the UK, claiming to be an authorised firm. ‘Fraudsters usually use this tactic when contacting people out of the blue, so you should be especially wary if you have been cold called.'

St James's Place (SJP) has expanded its online cash management platform to clients with £50,000 to save and made it available across its adviser network. The platform, which launched in 2017 with the help of FinTech firm Flagstone, was previously only available to private individuals, SME corporates and charity clients with a minimum of a quarter of a million to spend. The offering has now been rolled out to all 4,096 SJP advisers to make available to their investment clients - up from 3,415 when it started. The service gives clients access to over 550 deposit accounts from over 30 banks and building societies, both high street and challenger brands.

Lloyds’s private banking clients will benefit from a new service the bank is setting up to tackle economic abuse. Economic abuse occurs when individuals monopolise control over another person's access to financial resources. It has been recognised in the government’s draft bill on domestic abuse, amid mounting examples of people leaving their partners in thousands of pounds of debt and controlling their bank accounts and spending. Lloyds is now launching a dedicated support service that will provide guidance to all of its banking customers as well as directing them to specialist charities Surviving Economic Abuse (SEA) and Tender. At the same time, anyone who is a Lloyds customer and seen independently by the charities can be referred by them to the specialist team.

Large national and network firms have a responsibility to attract the next generation of advisers to replace those retiring, according to the joint Chief Executive of SimplyBiz. Matt Timmins said firms with 'deep pockets' such as St. James's Place (SJP) and Quilter need to do more to entice youth to a career in financial advice.

European football's governing body Uefa and Santander have launched a training course to stop football players 'overspending and taking poor advice' throughout their career. The Uefa Financial Management Training programme will be offered to footballers across Europe. It will teach them about the basics of savings and investments, as well as introducing players to the idea of running their own business. A number of high-profile footballers have struggled with their finances. Last year the Guardian revealed that poor investment and tax advice had cost a group of 500 players around £1 billion.

Ascot Wealth Management has launched its own discretionary fund manager (DFM) in response to the challenges of running advisory models on a large scale. The IFA, which was founded by Mark Insley in 2011, was running its own model portfolios on an advisory basis, but as its assets grew, this became a difficult process with many clients not responding to rebalancing requests, according to Shingirai Makuwaza, lead investment analyst at the firm.

Invesco’s net outflows topped £7 billion in the first half of 2019, with its funds losing £1.7 billion in June alone. According to Morningstar data, the US investing giant saw net outflows of £7.1 billion from 1 January to 30 June 2019 for its open-ended European funds. These outflows amount to £273 million a week. In total, Invesco has £117.2 billion in assets across these funds.

Costs at Seven Investment Management rose 15% last year, or almost four times the rate of revenue growth as the business invested in its back office systems to ‘ensure they are scalable’. The increase came during a busy period for the firm, which included the purchase of Edinburgh’s Tcam – adding £1.1 billion in assets – a corporate restructuring, the opening of an office in Jersey, the launch of 11 model portfolios and a Sipp wrapper in addition to managing the launch of GDPR and Mifid II. Profits slid marginally from £19.4 million to £19.3 million on revenue of £64.5 million versus £62.1 million in the same period of the year before.

In a New Model Advisor podcast, editor Ollie Smith was joined by Foco Global Managing Director Michael Taggart and Citywire UK Head of Audience Development Ian Horne to discuss why financial planning is not just about funds and asset allocations. It's also about putting the client at the centre of their own life. The same tips and tricks that writers use to engross you in your favourite novel can be just as applicable when you are presenting ideas to your client, or even overcoming a big obstacle such as major life change. For this episode, we discuss a different way of using storytelling in financial planning: one that makes the client the protagonist of their own life narrative. Listen here

Tilney’s losses last year rose by 43% to more than £14 million as the business faced additional integration costs and refinanced its debt to further its ambitious acquisition-fuelled drive for growth. The posting of the firm’s results for 2018 at Companies House came as Tilney confirmed yesterday that it is in talks to buy wealth and accountancy firm Smith & Williamson. The firm’s operating profit rose to £22.9 million from £18.3 million in the 12 months to the end of December 2018, largely due to a £10 million decrease in one-off costs related to its acquisition of Towry. Revenue marginally increased by 1.1% to £228.9 million year-on-year, while net inflows dipped 5% to £549 million.

In further news...Wealth Manager and national financial advice firm Tilney could be about to make its footprint even bigger by merging with rival Smith & Williamson to create a business with £45 billion of asset under management. The deal would see Tilney, which is backed by private equity firm Permira, succeed in a bid that failed once already in 2017. Then, Tilney had launched a rival bid for Smith & Williamson after it was reported Rathbones had begun merger talks.

The High Court has refused to sanction the M&G Prudential’s £12 billion annuity transfer to Rothesay Life. Last March Pru announced it was selling its annuity book to closed-book consolidator Rothesay Life with 400,000 policies transferring. This was announced alongside plans to de-merge from its parent company, which is ongoing. However in a market statement, Pru announced the High Court had declined to approve the transfer of annuities. In a statement, Pru said it was 'disappointed' at the outcome of the case.

Around 180 staff are leaving Aegon following the closure of its Hove office which was used to support its Cofunds migration. In 2017 Aegon announced plans to close its office in Hove, which was the base for Aegon’s Nationwide platform Investor Portfolio Service (IPS) which it inherited when it bought Cofunds in 2016. The Hove office was used to support the migration of the Nationwide platform, which finished in May and also the migration of Cofunds retail platform which happened last year. However once these projects were completed, this office was no longer needed, Aegon’s Chief Executive Adrian Grace said.

Octopus plans to launch its own platform after securing a £10 million deal to buy a technology business founded by former Ascentric Chief Executive Hugo Thorman. Seccl, which was founded in 2017, provides white-label platform technology to advisers and discretionary fund managers. As well as continuing to offer the white-label service, Octopus will work on building a 'full-service platform' for advisers following the completion of the deal. This will incorporate several Octopus services including Octopus cash, which finds the best interest rate for clients' cash savings.

In further news...The UK’s advice gap is set to widen as an estimated 15,000 advisers plan to retire in the next five-to-ten years while the intake of younger advisers is stagnant, according to a report from Octopus Investments. The report reveals the potential for a huge recruitment crisis in the financial advice profession with almost a third of UK advisers saying they expect to retire in the next five years, rising to six-in-ten (58%) in the next 10 years. This is equivalent to more than 15,000 advisers leaving the profession in this timeframe out of a current total of 26,600.

A London-based IFA has become the first Financial Planner to pass the Chartered Institute for Financial Securities and Investment (CISI) Level 6 Certificate in advanced financial planning. Adviser David Hearne of Satis Wealth Management passed his exam achieving a distinction and aims to use it as a pathway to the new CISI level 7 qualification – which is the highest UK qualification in financial planning.

London-based Jarrovian Wealth has set up a 23-mile charity walk along the Thames path in support of cancer charity From Me To You, which supported a junior staff member's terminally ill mother. From Me To You provides emotional support to people with cancer via the medium of letters, allowing people going through a very tough time to receive notes of friendship, sometimes from complete strangers.

Quilter has announced the launch of its fast track initiative to help students accelerate their studies in a Diploma for Financial Advisers (DipFA) at the national’s financial adviser school. Quilter Financial Planning’s adviser school has been running since 2016 and has seen over 148 graduates make the move into financial advice through the programme since launch. Typically, successful completion of the Quilter financial advice school takes eleven months when studying full time. The new fast track option provides students with the opportunity to speed up the completion of their level 4 DipFA studies by up to seven months.

In further news...Vertically integrated asset management and advice giant Quilter has announced the sale of its life assurance arm to ReAssure for £425 million, alongside profit growth and a re-platforming spending update in its half-year results. Quilter announced a month ago that it was considering the disposal of its life assurance business, which remained part of Quilter’s ‘wealth platforms’ business following the strategic de-merger from Old Mutual in 2017. The deal is subject to the regulatory approval of the Prudential Regulation Authority.

A Nottingham-based discretionary fund manager (DFM) has agreed with the Financial Conduct Authority (FCA) to stop managing investments. According to a note on Clear Capital Management’s FCA register entry, the DFM has agreed to stop the following regulated activities: dealing in investments as an agent; managing investments; and managing unauthorised alternative investment funds, unless it has the permission of the regulator. This became effective from 5pm on 23 April 2019.

The Chartered Insurance Institute (CII) is using its legal team to pursue an advice firm that has been advertising itself as a chartered financial planning firm despite the business never being a member of the CII’s corporate chartered status scheme. Tavistock-based IFA Hansford Bell has been displaying itself as an ‘established team of chartered financial planners’ on its website – this was still the case as of 1 August 2019. In June the CII’s legal team contacted Hansford Bell, asking the firm to remove the term ‘chartered’ from its advertising.

Charles Stanley has acquired Leeds-based Wealth firm Myddleton Croft. The purchase indicates Charles Stanley is back in the market despite an ongoing major restructure, in which it has disposed of a number of non-core businesses, including pension and securities arms, in recent years.

The never-ending growth story had to stop somewhere for St James's Place (SJP). Ever since pension freedoms were introduced, the restricted advice company has been a relatively steady share pick for investors, with inflows, profits and dividends rising. SJP finally encountered a bump in the road as shares fell 7% before mounting a recovery after SJP revealed it would freeze its interim dividend in half-year results.

Sanlam has been hit by a raft of senior departures amid its Chief Executive's push to inject new growth into the business and 'move into the modern world'. The departures highlight the challenge facing Sanlam's UK Chief Executive Jonathan Polin as he pushes through an ambitious growth strategy at the South African-owned wealth manager and advice business. However the firm is pressing on with an expansion strategy, which includes a restructure of its northern base. It has acquired Sale-based advice firm Avidus Scott Lang and hired two new portfolio managers.

 

Market Movers and Shakers

Close Brothers has continued a recent hiring spree, poaching an Arbuthnot Latham veteran for its private client division. Paul Denman joins as Private Client Director after a 14-year spell at Arbuthnot, were he established a new family office team, which looked after some of the Bank’s largest clients.

Wealth Manager Tilney has made two new hires in its Cambridge office as ex-Chartered Institute for Securities & Investment (CISI) Vice President for East Anglia Laura Ingram joins the team. Ingram, who is a Chartered Financial Planner with experience in the legal sector, will become Tilney's new Financial Planning Director in its Cambridge office. Former IFA Vincent Keane will also join the national as a Financial Planner. Keane has worked on a self-employed basis before advising international clients abroad.

Columbia Threadneedle Investments Investment Chief Mark Burgess is taking a career break after nine years with the business. Burgess, who was EMEA (Europe, the Middle East and Africa) Chief Investment Officer (CIO) and Deputy Global CIO will be replaced by Global Equity Head William Davies as EMEA CIO, who reports into the firm's global CIO, Colin Moore. Davies joined Threadneedle at its inception as a European Equity Fund Manager in 1994. He became Head of European equities in 1999 and Head of Global Equities in 2011, before becoming overall Global Equity Head in 2016.

Industry veteran John Lawson has left Aviva after almost six years at the provider. Lawson, who was most recently Aviva’s Head of Retirement Policy, left in April to ‘pursue other interests’. Prior to Aviva, Lawson was Head of Pensions Policy at Standard Life from 2001 to 2012.

Schroders Personal Wealth has appointed Jessica Miller as Head of Proposition and Claire Walsh as Head of Advice Strategy, Miller joins from Hargreaves Lansdown, where she spent seven years, most recently as Lead Investment Proposition Manager. Walsh has worked at Schroders since August last year as Personal Finance Director.

Quilter Cheviot has hired Brooks Macdonald veteran and former Head of Investment Management Nick Holmes as a Managing Director, as it continues to renew its ranks following a series of walkouts last year. Holmes had spent his entire career at Brooks, joining the firm as an Investment Manager in 1997 and spending a decade from 2008 as head its investment business.

London-based IFA Zen Wealth will leave network Best Practice after selling a 50% stake in the business to an advice firm connected to Pacific Asset Management. After leaving Best Practice, Zen Wealth will become an appointed representative of Somerset-based Chartered Financial Management .

HSBC Chief Executive John Flint has stepped down after only 18 months in the job. Flint will assist in the transition to a new Chief Executive but cease any and all duties immediately as Noel Quinn, Head of HSBC’s Global Commercial Bank, steps in as interim Chief Executive.

Outsourced Paraplanner Nathan Fryer has left Cranleigh-based financial planning business Informed Choice after just a month. Fryer announced his intention to join the firm back in March, under the premise that he would train to be a Financial Planner with the business. However, Informed Choice has confirmed he has decided he would be returning to his original paraplanning business Plan Works, which he began in 2014.

 

 

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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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