Your IndustryAug 15 2017

I'll make Intrinsic profitable, says Old Mutual's Feeney

Search sponsored by
I'll make Intrinsic profitable, says Old Mutual's Feeney

Loss-making restricted adviser network Intrinsic will be forced into a turnaround by significant investment from its hefty parent Old Mutual Wealth, chief executive Paul Feeney has said.

The business would eventually become self-sustaining, Mr Feeney said, though he declined to fix a date on when that would be, suggesting Old Mutual Wealth's support for the network will be open-ended for the for foreseeable future.

Last week the network saw its losses increase to £13m in the first half of the year.

Intrinsic has not made a full year profit since Old Mutual Wealth bought it in 2014.

In 2014 the Swindon-based network made a loss of £24.6m while in 2015 it made a loss of £11.5m.

Figures for 2016 have not yet been made publically available.

Mr Feeney told FTAdviser Old Mutual Wealth has been putting money into Intrinsic since the acquisition.

Mr Feeney told FTAdviser: “Intrinsic has invested in its proposition for advisers, including technology, new business channels, increased staff, acquisitions and its practice buyout initiative.

“The business is in a growth phase and the investments will generate revenues in the longer term to ensure it is self-sustaining.”

Adviser numbers at the network have grown since Old Mutual Wealth took over the running of Intrinsic.

When the investment platform bought the network in February 2014, a statement announcing the deal said it had around 3,000 independent and restricted advisers.

In Old Mutual Wealth's latest results, it reported the number of restricted advisers at Intrinsic had risen 11 per cent to 1,582.

A spokesperson for the company said the total number of Intrinsic advisers is approximately 3,700. The rest are made up of independent and mortgage and protection advisers.

This makes it the biggest network in the country by some margin, according to Financial Adviser’s most recent Top 100 rankings, compared with Openwork’s 829.

Mr Feeney also disputed that Old Mutual Wealth could fall foul of the Financial Conduct Authority’s cross-subsidisation rules.

Rules introduced by the Retail Distribution review in 2012 mean vertically integrated firms have to make sure the charges for their advice service covers the cost of providing that service.

Mr Feeney said: “At the moment we have not got a steady state to look at. We have still been building out this business.

“We speak with our regulator on this and they are fully aware and understand our situation.”

He added that he is “very happy” with how Intrinsic has been growing.

When asked when he predicted Intrinsic would become profitable, Mr Feeney said the company had not “publically stated” this.