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Financial Services Newsletter - Wednesday 7th March

07 Mar 2018


Market News

Old Mutual Wealth Private Client Advisers (OMWPA) has acquired A&M Financial Services as it continues to consolidate the high-end planning market.The Wiltshire-based financial planner advises on £40m of assets under advisement will now be managed through Old Mutual Wealth’s London office. Since its foundation in 2015, Old Mutual's financial planning division has made six acquisitions, including Cumbria-based IFA firm Dodd Murray and Yorkshire-based adviser Coleman Clough.

Close Brothers Asset Management has introduced an all-in fee in response to criticism from the Financial Conduct Authority (FCA) over the lack of clear disclosure around fund costs in the industry. In a letter to investors, Close Brothers said it had replaced several charges taken separately from its funds with a single fixed fund management fee (FMF).The changes went into effect in February.It means investors will pay a single fixed fee instead of an annual management charge, fees to the depositary and variable expenses, such as the costs of third party service providers, as well as legal and regulatory costs.However, two charges will still remain outside the FMF, with investors still paying underlying costs charged by any third party funds held in Close Brothers’ funds, as well as transaction costs. These changes impact 15 funds. Close Brothers said some funds will see ‘small’ increases in costs (0.04%) from the latest published ongoing charges figure (OCF). The increase will be part of the annual management fee portion of the FMF, due to higher costs of running the funds.

Sanlam UK has acquired financial planning firm Grennan Advisers for an undisclosed amount, adding around £60m in client assets. Grennan Advisers is based in East Yorkshire and was launched in 2013 by principals Stuart Grennan and Helen Chapman. Grennan and Chapman will work alongside Sanlam to help with the handover and integration of client accounts. This follows the acquisition of Cheltenham-based Tavistock Financial by Sanlam back in October 2017.

AJ Bell has launched a six-strong range of managed portfolios investing in active funds, adding to its traditionally passive-based funds of funds. The range will be available via the AJ Bell Investcentre platform, and will mirror the asset allocation of the company's existing service. The new active range will contain six portfolios which are benchmarked against risk profiles 3 – 8 in Distribution Technology’s Dynamic Planner risk ratings. All the portfolios will have an annual management charge of 0.15% + VAT, in line with the recent price cut AJ Bell announced on its passive MPS. 

London-based advice firm John Lamb will launch its managed portfolios to a wider audience through a newly created wealth management arm. The firm will offer clients the opportunity to access portfolios managed by Purple Strategic Capital directly as well as through a John Lamb Financial Planner. Services are delivered through a range of in-house personal portfolios specific to John Lamb Wealth Management clients, powered by Purple Strategic Capital. Despite being a relatively new name in the market, the specialist portfolio manager has over £3.5 billion in assets under management. 

Advice firm and discretionary fund manager (DFM) Saunderson House has revealed it has been put up for sale by its parent company IFG. In a market update, IFG, which also owns platform James Hay, has announced a sale of the advice firm is the best course of action and said offers are already being received. As of the end of 2017 Saunderson House had £5.1bn of assets under administration, compared to £4.6bn at the same time in 2016. The firm added 247 new clients in 2017 compared to 215 in the previous year. IFG did not disclose the reasons for the advice firm being put up for sale. The company has also announced the platform and Sipp provider which it also owns, James Hay, could be facing a tax penalty as high as £20m over the biofuel investment Elysian Fuel.

AIM-listed national IFA Frenkel Topping has appointed Harwood Wealth Management as its investment research partner as it expands its asset management business. As part of the move, the asset management division, Frenkel Topping Investment Management, is changing its name to Ascencia Investment Management. Frenkel Topping restructured its business last December with a new investment committee formed following the resignation of Jason Granite as its Chief Investment Officer. Instead of appointing a new Chief Investment Officer, Frenkel Topping has now appointed Wellian, a subsidiary of Harwood Wealth Management, as its outsourced provider of portfolio research. Harwood Wealth Management will be paid a fee dependent on the size of Frenkel Topping’s discretionary assets under administration, currently estimated at £250m.

The Financial Ombudsman Service (FOS) has upheld a claim against troubled wealth firm Beaufort Securities, as it continues to look into a ‘steady stream’ of cases against the company. Last year, it was revealed that Beaufort directed clients to use Legal Force for claims against their Advisers. Beaufort Securities has been in the spotlight since December 2016, when it agreed to a restriction of its discretionary investment powers. The Financial Conduct Authority said the company could not carry out any regulated discretionary management service unless it received instructions from clients, IFAs or pension providers beforehand. Since then, the FOS said it saw an increase in calls and enquiries about the issue and the company in particular.

Acquisitive national advice firms such as Standard Life’s 1825 and Ascot Lloyd are extending financial incentives beyond owners to rank-and-file advisers. This comes in a bid to spread the benefits of being taken over and incentivise staff to stay on. It is a common feature of the way big firms make acquisitions that payments include a deferred element, payable only when certain targets are met. For example, the full-year results (to 31 October 2017) of AIM-listed consolidator AFH, stated £3.2m had been paid in deferred considerations for acquisitions made in previous years.However, a new trend has been discovered for retention payments to also be distributed to the non-shareholding advisers at the acquired firm. 1825 has adopted this model. It has been reported that 1825 sets aside ‘retention pots’ when it acquires firms. Advisers are awarded retention payments over a number of years to try to ensure they do not leave during that period. 1825 has good reason for implementing this as some firms it has bought have suffered a spate of departures following the takeover. Since its inception in 2015, 1825 has acquired six advice firms throughout the UK, providing it with a presence up and down the country. 

Support services provider SimplyBiz is once again considering an initial public offering (IPO), according to reports. Previous plans to float were shelved in May 2015 after the company decided to retain its independence. At the time SimplyBiz Managing Director Neil Stevens was reported to have said that retaining independence was important for the business, although he did not rule out a float in the future. SimplyBiz has appointed stockbroker Zeus Capital to advise on the potential float. Sources said SimplyBiz was looking for a market capitalisation between £140m and £155m, with £30m of new money raised. 

The Financial Conduct Authority (FCA) is set to attend a High Court hearing being brought against Sipp provider Carey Pensions next month. In March a lead case from one individual will be brought against Carey Pensions by solicitors Wixted & Co over due diligence on unregulated investments the firm accepted. The case, which will be heard at the High Court in London, will be based on the involvement of unregulated introducers. It has been reported that the FCA will also be present at the High Court in London. The FCA may make representations to the court if there is a question about its regulations. It will not be appearing as part of either the investors' case or Carey Pensions' case.  

Standard Life Aberdeen has sold its insurance arm to Phoenix Group in a £3.2bn deal.Following the sale, Standard Life Aberdeen will keep its three platforms (Standard Life Wrap, Elevate and Parmenion) and advice arm 1825, which currently sit within the insurance division. Under the terms of the deal, Standard Life Aberdeen will receive around £3.2bn. Phoenix will pay £2bn in cash, with a further £312m dividend payment due from the insurance company before it is sold. The remaining value of the deal consists of Standard Life Aberdeen taking a 20% stake in Phoenix. As part of the announcement, the pair said they would continue their arrangement whereby Standard Life Aberdeen will continue to be the asset manager for the insurance business acquired by Phoenix as well as the assets it already manages for Phoenix – in total these assets now amount of £158bn.

St James's Place (SJP) founder and life president Mike Wilson has died after a battle with cancer, aged 74. Wilson helped set up the advice giant alongside Mark Weinberg in 1991. The pair received backing from Jacob Rothschild, and accordingly named the insurance salesforce, as it was then, J. Rothschild Assurance.  As the company's first Chief Executive, Wilson oversaw its listing on the London Stock Exchange in 1997 as St James's Place Capital following a reverse takeover deal. He also led the company through the sale of a 60% stake to Halifax Group, a deal that would eventually end with Lloyds owning some of SJP following the collapse of HBOS. Under Wilson SJP developed the model it is famous for now: using external fund managers to run customer money while developing a proposition of its advisers. Wilson stepped down as chief executive in 2004 to become chairman of the company. When he left this position in 2011 Wilson became life president and chairman of the SJP Charitable Foundation. In 2012 Wilson was awarded a CBE in the Queen's Birthday Honours list for services to the insurance industry and charity. Investment trust RIT Capital, which the Rothschild family owns a 21% stake in, appointed Wilson to its board as a Non-Executive Director in 2013. He stepped down from this position at the end of 2017 due to his ill health.

Jardine Lloyd Thompson (JLT) has bought SME Broker Chartwell Healthcare to create a £200m premium PMI and group risk business. Chartwell is headquartered in Bristol and has 50 employees, specialises in private medical insurance (PMI) and associated protection products. The new business, which will bring together JLT’s existing employee benefits group risk and heath business with Chartwell will have almost 7,000 clients. Chartwell customers will be offered consulting expertise across the broader benefits spectrum, including pensions and flexible benefits and will get access to JLT’s software platform Benpal.

AFH Financial has acquired Hertfordshire-based advice firm Harrison White FS in a £738,000 deal. On completion Harrison White founder Steve White will join AFH as an Adviser.

Market Movers and Shakers

Paul Morton left Grant Thornton in Sheffield to join Chartered Financial Planning firm Create Financial Managementin Derby. 

Julius Baer International has hired the following five Wealth Managers for its new Edinburgh office from its rival, Barclays: James Osborne, Ross Clephane, Alan Colquhoun, Paul Turnbull, and Stuart Paterson.

UBS Wealth Management has hired Richard Wood from Barclays Wealth as a Client Adviser to bolster its Leeds office. 

Arbuthnot Latham has appointed Colin MacKenzie from Seven Investment Management as a Director of Investment Management.

Richard Freeman has confirmed he will retire from Old Mutual Wealth (OMW) at the end of June this year. Freeman is leaving OMW to focus on personal interests and will continue to be active in the charity sector, where he currently chairs the development board of Dallaglio RugbyWorks. Freeman will remain a Director at the firm and a board member of the Tax Incentivised Savings Association.

Alexandra Mancini joins Barclays’wealth and investment management division in Scotland as Wealth Manager.

National advice firm Ascot Lloyd has appointed Graham Bentley as Chairman of its investment committee. Bentley has replaced former Old Mutual Global Investors bond manager Stewart Cowley in the role. 

Foster Denovo has appointed Richard Horton as Finance Director on an interim basis and will support the firm through a period of 'strategic growth'.

Old Mutual’ s Chairman Patrick O’Sullivan will leave the company after its planned separation to take up the chairmanship of retirement business Saga.

Support services provider SimplyBiz Group has appointed former Financial Conduct Authority technical specialist Rory Percival to oversee compliance on its centralised investment proposition (CIP) offering. 

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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