Of all the purchases Old Mutual made in its somewhat reckless global expansion, the acquisition of European life office Skandia in 2006 wasn’t all bad. After all, its successor, Quilter, built from the British rump of Skandia, now has a similar market capitalisation on the JSE to its former parent Old Mutual.
But in fact Quilter bears little resemblance to the Skandia which then Old Mutual CEO Jim Sutcliffe bought. The most obvious difference is that the original Swedish business was ditched quite early on and more than a dozen life insurance subsidiaries were sold — stretching from Italy to Australia.
Quilter CEO Paul Feeney was on one of his first visits to SA since the pandemic broke out, and he talked to the FM in the offices of stockbrokers Avior; ironically, an office with a perfect view of Old Mutual’s headquarters.
Feeney says that in spite of its numerous disposals, Quilter still has the reputation of being a serial acquirer — in 2015 it bought the blue-blooded wealth manager Quilter Cheviot, from which it derives its name. It has also bought a number of financial planning businesses with quaint names such as the Lighthouse Family and Sage Derby.
Quilter now has the second-largest team of "restricted" (tied) advisers in the UK, after St James’s Place — 1,700 vs 4,500. And Quilter is double the size of the No 3 player, Tilney Smith & Williamson.
Quilter also has the second-largest retail adviser platform in the UK — very similar to a linked investment service provider, or Lisp, in SA.
In fact, any day now, with £70bn under management, Quilter could overtake the market leader Abrdn (formerly Standard Life Aberdeen) to take the No 1 spot.
Feeney says the platform bears little resemblance to the Lisp Sutcliffe acquired. With technology partner FNZ it has been rebuilt to house not just unit trusts but many other products which brokers demand, such as exchange traded funds and listed investment trusts.
Competitive range
Quilter has never been a business-to-consumer business. It is just about impossible for a private investor to invest, say, £50,000 on the platform without a broker. But there is now a chink in the armour with the hybrid advice model, something SA Lisps should also consider. Feeney believes there are 12.1-million nonadvised investors who are looking to invest, preferably through digital channels. He says just 3.6-million investors are advised by brokers or agents in the entire UK right now.
The target market he is looking for is those with £50,000-£100,000 to invest, analogous to the EasyEquities client base in SA.
Quilter will get "warm" introductions from 36 trade associations and unions, representing groups such as pilots, nurses and teachers. These new clients will probably never see an adviser in the flesh, but most probably don’t want to. They will be able to do everything they need to do through a self-service platform.
And Quilter has quite a competitive range of multimanager products — at least if you are prepared to treat recent performance as a guide. Its Cirilium Balanced Fund is in the top decile in its peer group, and the rest of the range in the top quartile over three, five and 10 years. So these look like respectable options for digital investors.
Quilter puts a lot of emphasis on risk management, so its funds will err towards the conservative. It is not for investors looking to shoot the lights out, but it will prosper in the risk-averse climate of Middle England.
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