Firing lineDec 11 2020

M&G’s new wealth boss on how he'll rival Quilter & SJP

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M&G’s new wealth boss on how he'll rival Quilter & SJP

When M&G’s new wealth boss made the move from Colorado to Scotland at the start of 2020, his expectations for how the year would play out were likely far from the reality that ensued.

Plunged into lockdown on the outskirts of Edinburgh in March, David Montgomery faced his latest challenge: helping form M&G’s new £28bn wealth arm.

“It’s all about bringing it together so it’s bigger than the sum of its parts,” says Mr Montgomery, who was announced as the arm’s managing director in September. “The key thing about M&G Wealth is combining well-established organisations that are already there.”

M&G Wealth is a new arm of the giant asset manager made up of Ascentric (the platform recently acquired from Royal London), Prudential Financial Planning and the M&G Direct funds business.

The key thing about M&G Wealth is it's combining well-established organisations that are already there David Montgomery, M&G Wealth

Mr Montgomery points out the “obvious synergies” in such a move. He says: “By bringing the advice business closer to the platform offering, which is then closer to the investment management [arm], we can benefit the entire value chain from an adviser and customer perspective.

“We want to create opportunities for each business, to create opportunities for the group and create opportunities for our clients and customers by bringing all the capabilities together.”

Grow, grow, grow

On the advice side of things, M&G’s goal is to expand its offering as much as possible.

Using its recently imposed self-employed model ‘The Advice Partnership’, or ‘Tap’ for short, Mr Montgomery says the company wanted to rival the likes of St James’s Place and Quilter in the advice space.

He says: “There are a number of ways we will grow. We have a good business that people will recognise, and a good brand, good products and services, so we will try to bring people into Tap on those grounds.

“We will also look at acquisitions, but it would be smaller acquisitions of smaller advice firms who wanted to move into a model like ours.”

M&G recently made the decision to move all its advisers to a self-employed model, with formerly employed advisers of Prudential Financial Planning joining Tap – which is part of Prudential Financial Planning – as self-employed advisers.

Tap, which offers restricted advice and launched in November 2019, initially started with 20 advisers but has since grown to a 230-strong adviser business.

Mr Montgomery says: “We created the opportunity to expand the self-employed Tap model, which will allow us to expand that advice business going from 200 to 350, to 500 advisers – that will be our model for growth.

“Do we want to be an 1,000-adviser business? Yes, but does that happen next year? Probably not. We haven’t put a timeline on it, but we have the ambition to really grow that business.”

For now, M&G is focusing on ensuring the model works and that the advisers already part of Tap are well set up and catered for.

‘Pick and mix’ vertical integration

Although bringing the Ascentric platform, M&G funds business and restricted advice partnership closer would create a thoroughly integrated business throughout the value chain, M&G will still provide ‘pick and mix’ options for advisers.

For example, advisers that are not involved in Tap will remain able to use the Ascentric platform to access whole-of-market products, while a further part of the group’s distribution business lies with Prudential.

Mr Montgomery says: “There is the option for a deep vertical integration here, where Tap advisers use the Ascentric platform to access M&G and Pru products.

“But advisers can also pick what it is they want from that range, and that’s where the power of M&G comes in because we have all these things available.”

He describes the vertical integration trend sweeping the industry as an “interesting” development, noting that it was the direction a lot of organisations were going in and that M&G would look at it “no differently”.

Next year, M&G will look to rebrand Ascentric to ensure it comes across as part of the group. This could be anything from a colour change or design shift to a complete name rebrand.

Developing and improving the recently acquired Ascentric platform is also a key part of the growth plans for M&G Wealth, both to encourage advisers to join Tap and to bring external advisers to the platform.

“We want to make an investment in the technology and the service,” Mr Montgomery says. “There are tools that advisers would typically look for that haven’t been invested in Ascentric for a while.

“In general, the platform needs a bit of TLC and we’re prepared to give it that. We know we can make it much more efficient, more digital, and as a result we will see clients getting a better experience.”

As well as improving the existing parts of M&G Wealth, the company will look to plug the holes currently in its offering: discretionary fund management and robo-advice.

The first half of 2021 will be focused on improving the service and efficiency of all parts of the group, but from the middle to latter half of next year the industry will see new services come to light.

Mr Montgomery says M&G will look to provide DFM services to advisers through the Ascentric platform, which already has the capability to hold model portfolios.

M&G also has big plans for the company’s robo-advice development, which is based around a “bionic hybrid advice” offering – half robo-advice, half human advice – which it says it hopes will bring down the cost and assets needed to access advice. The group has recently selected the vendor and is piloting the capability.

Mr Montgomery adds: “This is the kind of stuff I get up for in the morning, big transformations of businesses and pulling all these parts together.

“There is lots of change going on as part of this transition, but this is my job: to create a common purpose and direction. We win in the market if we bring the power of these businesses together.”

Imogen Tew is a senior reporter at Financial Adviser and FTAdviser