Model PortfoliosFeb 20 2023

Richmond Wealth signs MPS deal with L&G to cut costs for clients

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Richmond Wealth signs MPS deal with L&G to cut costs for clients
'Everyone has their mind focused on the incoming consumer duty' [FT montage, Bloomberg]
ByRuby Hinchliffe

Advice firm Richmond Wealth has decided to move clients’ money into L&G’s model portfolio service (MPS) in an effort to cut costs ahead of the City watchdog’s consumer duty.

Chief executive Chris Bryans told FTAdviser the cost of doing discretionary partnerships with some providers is 1 per cent plus VAT, but that L&G is allowing the firm to invest client money “for a twentieth of that price”.

“It’s the right thing for our customers. The portfolios are global, diversified, and professionally managed,” Bryans added.

“Everyone has their mind focused on the incoming consumer duty. The Financial Conduct Authority is coming down hard on this, that’s what’s driving it.”

As part of the deal, L&G will take on mandatory due diligence required as part of the new consumer duty rules. 

By outsourcing reporting and risk functions, Bryans said the advice firm can focus more on client service.

The MPS offering launched in June 2021 with initial pricing set at an annual management fee of 6 basis points.

L&G will provide six model portfolios for Richmond Wealth’s clients, which include active strategies with risk adjusted returns and specific risk return profiles to suit different investors.

The £1.29trn asset manager’s model portfolios include passive vehicles like exchange-traded funds, as well as active funds managed by itself and third-party managers. 

Richmond Wealth’s six portfolios will be managed by a team of 40, headed up by L&G’s head of asset allocation, Emiel van den Heiligenberg. His particular team oversees £65bn in multi-asset funds.

Head of retail multi-asset funds, Justin Onuekwusi, oversees the overall MPS offering.

L&G believes its MPS is scalable and competitive in price as firms review their consumer duty implementation plans.