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View the article online at http://citywire.co.uk/wealth-manager/article/a747458

How to tap into the big XO opportunity

by Elsa Buchanan on Apr 25, 2014 at 11:04

‘Each organisation can give it its own look and tweak it, and it’s much more efficient from an expense point of view.’

Conversely, Charles Stanley’s service was developed from its existing online capabilities, such as its now-closed Fast Trade share dealing service. Using the existing back office, the majority of the investment went into developing its infrastructure as well as the positioning of the business, including the look, feel and branding of the platform.

‘It’s a very different market to an intermediated market, whether that is financial planning or investment management, so sticking up a website and hoping that everyone will come to you just doesn’t happen,’ Hudson said. ‘You have to be clear on how to attract clients.’ In his view, white-labelling is less cost-effective.

For Compeer senior analyst James Brown, the XO business, however it is rolled out, presents opportunities for wealth managers, with total XO assets hitting a record £113.3 billion last year.

‘RDR helped but XO has also been growing rapidly and consistently over the last seven years,’ he said. ‘It’s now one of the most profitable sectors within UK wealth management and can cater for any value client. If there are firms considering launching an XO division, I would understand why. However, it is a very competitive market out there, so it’s not to say if a firm set up an XO arm now it would pick up instantly.’

Not all firms are keen though. Rathbones finance director Paul Stockton said the company is not considering  XO. ‘While we can see some opportunities with the XO proposition, discretionary is our core offering and we’re keen to stay there.’

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