CompaniesMay 27 2015

Succession seeks DFM licence, but will not manage funds

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Succession seeks DFM licence, but will not manage funds

Advice consolidator Succession Advisory Services has revealed it is applying for discretionary fund management permissions as it announced plans to mandate funds to chosen providers.

Speaking to FTAdviser, chief executive Simon Chamberlain explained that the move represented a completion of what he called the “holy trinity” of value, combining adviser fees through the national advice firm, administration fees through the platform, and now fund management fees via a DFM.

“We have no intention to manage the assets, they would be mandated to model portfolios with external fund managers.

“This means we can replace managers and avoid the expense and hassle of re-signing, which is especially important when we reach our desired scale of around 50,000 clients, who we don’t want to be pestering all the time.”

He added that the move should also drive the price down by avoiding unnecessary marketing and compliance costs, meaning charges of between 10-15 basis points, rather than around 40 basis points on average.

“We only get paid by the client, so we want the cheapest possible, in order to achieve greater revenue,” he commented, adding that the license is expected before the end of this year.

The plans came as the platform part of Succession Holdings announced an operating profit for last year of £1.4m, up from £444,000 in 2013.

Results for the year ending 31 December 2014 confirmed total sales from platform and membership fees were £6.3m, reflecting year-on-year growth of 24 per cent. This follows a 29 per cent increase to a little more than £2bn in funds under management.

Mr Chamberlain put the growth down to the fact that clients of acquired member firms are attracted to placing their investments on the Succession Investment Platform, because Succession Advisory Services is part of the same group as their firm.

“This puts the company and Succession Group in a unique position in the marketplace and creates greater client security,” he added.

The vertically integrated model is working with 72 member firms and during 2014 appointed both new regional directors, to support member firms preparing for acquisition, and field-based platform specialists, to segment clients to the most suitable proposition.

There was also a senior management restructure, including new non-executive and executive roles.

peter.walker@ft.com