His point – that in the long run investors become better at assessing the substance and value of a company – may well be relevant for Quilter’s shareholders and advisers weighing up the Plc’s new direction and impact (if any) on service.
The fanfare around the flotation, which valued Quilter at £2.76bn on 25 June, included chief executive Paul Feeney’s (pictured) proclamation that the date was “an important milestone” in the company’s history.
Jubilant early news around the initial public offering (IPO) quickly gave way to announcements on a significant divestment and rebranding process now gathering pace.
On 29 June, the firm completed the sale of its single strategy asset management business to the management team and funds managed by TA Associates, the private equity firm. The deal was worth £583m.
As we still have clients on the Old Mutual Wealth platform, my concern is potential disruptions that may be caused during the ‘re-platforming’ process onto the new platform. I hope they get it right.Ricky ChanAnother announcement emerged soon after, that Quilter’s multi-asset investment business had been rebranded as Quilter Investors.
The £17.1bn asset manager is the first business to rebrand under Quilter and its multi-asset investment solutions including Cirilium, Generation, Creation and the sub-advised funds within WealthSelect now carry the new brand and Quilter Investors prefix.
Future proofing
With the dust now settled on a highly anticipated move to public ownership, is optimism shared across the adviser community? Not entirely.
Jeremy Edwards, adviser at Martin-Redman Partners, pointed out that advisers need to know if a decision made about where to place a client several years ago will still be valid in a few months, as Quilter moves forward.
“When you made that decision for a client, it was done partially because you could expect a similar or better level of service in the years ahead. Just a few years on, you don’t want to change where a client is placed. For one thing it might look like churning,” he said.
Mr Edwards added that he has seen situations before where private finance has invested heavily in a company, “and the nature of the business changed overnight”.
Offering a more sanguine view, Philip Hanley, director and independent financial adviser at Philip James Financial Services, said there is unlikely to be any difference in the short term. “As with Standard Life's sale, it will take some time for the new management team to work out a strategic direction, and the adviser relationship teams are working hard to reassure us that 'things can only get better'.
“In the longer term, Quilter, as we know it, is likely to disappear into the direct distribution model towards which Old Mutual has been working, within which I can't see there will be room for discretionary fund management, only a respected brand name,” he said.
Ricky Chan, director and chartered financial planner at IFS Wealth & Pensions, said he was “pleased to see that Quilter still recognises the importance of working with IFAs”.
But he added: “With its growing in-house restricted advice arm, it is likely that there will be discriminatory pricing in place. For example, more favourable costs for its in-house advisers for the same platform/investment solutions offered to IFAs, which causes an uneven playing field.
“As we still have clients on the Old Mutual Wealth platform, my concern is potential disruptions that may be caused during the ‘re-platforming’ process onto the new platform. I hope they get it right.”
Profitability
Other advisers who have used Quilter in its previous guises will be tracking how the company’s profitability will pan out in the long term.
Scott Gallacher, chartered financial planner and director at Rowley Turton, said: “We were previous supporters of Old Mutual Wealth under its original incarnation of Skandia. However, we haven’t proactively used Old Mutual Wealth for some time as we felt there were better options for clients.
“The key downside would be that some platforms historically have struggled to deliver long-term profitability, and can be capital intensive businesses. Consequently it will be interesting to see how Quilter copes without the direct support of Old Mutual.”
He added: “We’ll be watching the future of Quilter with some interest.”
A Quilter spokesperson was also keen to stress that advisers won’t see any differences.
“Today our business offers a huge amount of support for advisers, including technical specialist support, and none of that will change. Our business is built around a belief that face-to-face advice offers people the best outcomes and we continue to support advice in all its forms,” the spokesperson said.
It is understandable that at this early stage Quilter has sought to assure advisers directly that standards will only improve, and publicly there are specifics emerging among the platitudes. For one, the company is looking to develop more products.
The group is also now implementing the UK Platform Transformation Programme in its UK platform business. The board hopes the new platform will enhance service levels, support the group’s advisers and enrich the overall proposition.
Quilter’s spokesperson added: “We will continue to build our national advice business, OMW Private Client Advisers, through recruitment and small acquisitions. The establishment of the Financial Adviser School (FAS) has also enabled us to train new advisers and we expect this to continue. FAS is looking to enhance its offering, for example by adding a chartered status qualification in the coming months.”
It is the company’s objective that this adviser growth will be supplemented, in Quilter Cheviot, by pursuing targeted investment manager recruitment to expand regional coverage.
Master of none?
Aside from advisers’ concerns, Quilter is now beholden to analysts’ briefings, and they can dampen the glow around a newly formed Plc.
In a note circulated ahead of the IPO, David McCann, of the stockbroker and corporate adviser Numis Securities, described Quilter as a “jack of all trades, master of none”.
His note added: “In trying to be all things to all people in the wealth management industry, Quilter lacks focus in our view. As a result, we think it will struggle to become a market-leading vertically integrated player, like St. James's Place. This does not necessarily make Quilter a bad business, just a less valuable one compared to some in our opinion.”
With seven distinct businesses operating across the wealth management value chain, Mr McCann does at least acknowledge Quilter’s diversification, and its ability to capture revenue across the value chain and offer choice.
Quilter’s spokesperson, however, said the company is differentiated from many of its competitors in “the flexibility it offers customers and advisers”.
He added: “Increasingly, customers and advisers are choosing to use more than one of the group’s services. This integration of the group’s propositions offers benefits for both customers and advisers.”
Marcel Le Gouais is a freelance journalist
