Old Mutual Wealth chief executive Paul Feeney predicts that restricted advice will become the industry’s dominant model before 2020 with the number of advisers not being able to describe their approach as 'independent' set to double.
‘It is clear that restricted advice is becoming more and more important,’ he said. ‘Just one year after the implementation of the RDR, approximately 40% of the UK market is now restricted. Within the next five years, that number will move from 40% to approximately 80%.’
Feeney (pictured) characterised Old Mutual’s acquisition of Intrinsic within that context, so the asset manager would not be shut out of a major distribution channel.
‘Distribution is consolidating; it is consolidating very rapidly,' he warned.
Within this new environment, Feeney argued that taking a restricted approach is essential for partnerships between fund groups and advisers. ‘Basically, the distributor is taking the liability on the advice that the adviser is giving, which is why we want controlled advice.’
Currently, only 1,000 of Intrinsic’s 3,000 advisers are restricted but Feeney tipped that proportion to grow.
‘We don’t expect that the whole of the 2,000 will move over to fully controlled advice. But we do suspect that, with the proposition that we now together have with Intrinsic and Old Mutual Wealth, a large portion may choose to do so.’
As more switch, Feeney believes that there will be a ‘material increase’ in Old Mutual Global Investors’ assets since in-house products would form ‘the core’ of the restricted proposition.
He did not disclose his target for that growth, but said that it would be in the ‘multiple, multiple billions’.
‘We need big distribution if we’re going to move the needle. There’s no point in us doing this in a small way.’
He relayed that there were no plans at present to rebadge the advisers with the Old Mutual Wealth brand. ‘At the moment, I think Intrinsic is a great brand,’ he stated, and described it as more of a ‘franchise-based proposition’.
Feeney added: ‘We are no longer an insurance company. We’re a wealth and asset management business.’