LV considers buying small advice firms

LV considers buying small advice firms

LV will consider buying small advice firms if it is not able to achieve the desired growth of its in-house advice team organically, John Perks has revealed.

LV’s managing director for life and pensions said the mutual provider is adding to their adviser headcount in the order of five to 10 people a year.

These advisers are supporting the provider’s robo-advice business.

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Mr Perks said: “If we ever feel that it [the advice business] is not growing as fast as our appetite then we may look to add on some small advice firms.”

The reason why LV is adding a small number of new advisers each year is related to the efficiency of the company’s digital systems, he said.

LV acquired a majority stake in robo-adviser Wealth Wizards in 2015, and launched a robo-paraplanner tool last May, which helps firms provide retirement advice in less than two hours.

The provider is expecting its investment in robo-advice to break even next year.

According to Mr Perks, the advisers hired tend to occupy more senior positions and provide more specialised advice.

He said: “We are using them for checking, for design purposes and to complement the digital side.”

Ben Smaje, chartered financial planner and managing director at Kennedy Black Wealth Management, said he believes that LV is "trying to have a vertical integrated insurance model".

The provider follows suit on a series of other companies betting on an in-house advice service.

Standard Life, for example, has been investing in 1825, the advice arm it formed after initially buying Pearson Jones and which it added to with the purchase of Glasgow-based Munro Partnership last year.

Standard Life's goal is to turn the firm into a nationwide financial advice business, which should achieve profits this year.

Old Mutual Wealth has also been buying small advice firms to complement Old Mutual Wealth Private Client Advisers, its national financial planning business.

The provider bought two advice firms in Birmingham in March and one in Cumbria in September.

Aviva and Prudential are two other providers who also recently announced intentions of developing an advice business.

Mr Smaje sees reasons for concern in life and pension providers entering the advice industry.

He said: “I am always a bit concerned about providers who try to cut out the middle man. In my experience, that does not tend to end well for the consumer.

“Providers do it because they want a bigger slice of the pie. They are relying on a big brand and on the trust that some of the customers have in them, and they have a tendency to exploit that.”