InvestmentsMar 29 2017

Embark CEO reveals thinking behind Discus acquisition

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Embark CEO reveals thinking behind Discus acquisition

Embark Group acquired discretionary investment research company Discus to beat its Sipp provider rivals on investment due diligence, the firm's chief executive officer has said.

Phil Smith told FTAdviser the firm, which owns Sipp specialists Hornbuckle and Rowanmoor, had "no interest" in developing its own investment products.

Embark's acquisition of Discus followed the acquisition of fund research firm The Adviser Centre and multi-asset research provider Scopic Research.

All three firms offer FCA-regulated advisers free access to their research and do not receive payments from any other source.

Given Embark does not cross-market its pension administration services, the businesses appear to raise no revenue for their parent firm at all.

But Mr Smith explained that the acquisition of these businesses meant Embark had the investment expertise to fulfill its fiduciary duties as a trustee of Sipps and small self-administered schemes (Ssas).

"Under our trustee products, we have a regulatory responsibility to monitor investment products and the entities that are running those investment products," he said.

He claimed this expertise set Embark apart from its competitors, which he said lacked such expertise.

"If a provider of pension products takes its fiduciary duties seriously, it should have a large team of investment professionals. 

"The reality is, with the exception of AJ Bell, no Sipp administrators have that expertise. We think that's ludicrous," he said.

Mr Smith categorically denied Embark had any intention of offering its own investment products.

"If we wanted to run an investment company, we would still be doing it," he said, referring to the fact that many of the firm's senior figures previously worked for investment houses.

"We have no intention to do that. We want to maintain the open architecture," he said.

He added that the three research companies would retain their branding, and would remain entirely free for all FCA-regulated advisers.

He said he now considered the firm's investment expertise complete, saying there were no further similar acquisitions on the horizon.

james.fernyhough@ft.com