Schroders won't follow rivals' advice grab lead

Schroders won't follow rivals' advice grab lead

Schroders' investment in a financial advice business is not part of a plan to build a distribution arm like some of its rivals, according to the company.

Both Standard Life and Old Mutual Wealth have in recent years bought up advice firms, Standard Life to build its 1825 national advice business, and OMW purchasing 3,000 adviser strong network Instrisic.

Known as 'vertical integration' - the housing of both the provider of products and their distributors in the same group - it is a way for financial services firms to own the entire value chain since the Retail Distribution Review banned providers enticing advisers over to their products via commission.

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But James Rainbow, Schroders co-head of UK intermediary, said the decision to invest in Benchmark Capital was about improving its relationship with advisers.

He said: “Benchmark Capital today is basically a technology-led solutions provider to advisory businesses. It works with other advice firms to provide a whole range of services.

“One of the impacts of the RDR is that there has been a significant shift in the relationship between the distributor and the manufacturer.

“As the manufacturer, we find ourselves in a place where if we offer the same services we always have, there is a significantly higher risk of being replaced.

“If you can build deeper, long-term relationships with the customers you are already selling to, which in our case is the advisory and wealth management market in the UK, that risk of being replaced is reduced.

“The words we have not used in this context are ‘vertical integration’. We don’t see that as the case.”

Benchmark Capital, which is based in Surrey, consists of a number of different companies including Aspect8, the chartered financial planning firm, and Best Practice IFA Group, a network.

It also includes a technology company, an institutional funds platform, and a small restricted advice business.

Mr Rainbow said that Benchmark’s independent advice businesses would “absolutely and categorically” keep that status.

He said Schroders and Benchmark are looking at an “enormous” list of opportunities for growing the business.

He said: “Some are based in the UK, some are international.

“We are in the relatively early stages of a new relationship and it is a little bit premature to say what we are planning.”