Advice firm consolidator AFH's chief executive Alan Hudson has said the company now has the scale to pressure fund managers and providers for cheaper deals to pass on to its clients.
He revealed AFH has already reached deals with six fund management companies to run segregated mandates on the company's behalf, which he said would provide a saving of between 15 and 22 per cent.
Referring to AFH's business model - which sees it buy up smaller advice firms across the country to build localised scale - Mr Hudson said this latest strategic move would allow AFH to provide "all the benefits of the corner shop in terms of convenience but with the benefits of the pricing power of the supermarket".
He said: "As we get bigger, we want that to create buying power and we want to use that buying power for the benefit of our clients.
"I am not going to name names but there are businesses that have used their scale to reduce third party investments costs but have not focused on giving the benefits of that to their clients," he added, in what is understood to be a veiled reference to rival wealth manager St James's Place.
"We are at the start of a journey that we think will change the landscape because as we get bigger our purchasing power improves," Mr Hudson said.
Earlier this month AFH revealed it now has more than £3bn in funds under management and post-tax profits of £3.1m.
During its 2017 financial year, the Aim-listed company bought 13 financial advice firms as well as a financial protection broker.
Mr Hudson said one of the important parts of his strategy for the company was transparency around fees and pricing for clients.
He said: "If your strategy is not to make more money from clients but to improve their position then clients are going to take comfort from that, and being absolutely transparent in terms of the costs is absolutely central to getting that message to them."
When asked whether he was taking on other companies with similar models such as St James's Place, Mr Hudson said: "It would be nigh on suicide to take on a FTSE 100 company but what we are doing will shine a light on some other other models out there."
AFH has been operating segregated mandates with six fund management companies for the past six months - Henderson, Jupiter, JP Morgan, Schroders, BlackRock and Lazards - but Mr Hudson said the company was not yet in a position to reveal which funds they were operating.
He added that the mandates were still being seeded with assets so he could not yet reveal how much was in them.
Mr Hudson added that the nature of the deals with these companies would allow AFH to seek other mandates if they underperformed.
He said: "If we had signed a deal with these companies promising to manage this money for three years and they started to underperform then that compromises our independence because we are not acting in the best interests of our clients."
damian.fantato@ft.com
