Paradigm pulls the plug on joint venture with Henderson

IFA group Paradigm has pulled the plug on its joint venture with Henderson Global Investors.

As part of the Tatton Investments venture announced in October last year, Paradigm had intended for Henderson fund manager Bill McQuaker to run a range of multi-asset funds.

But Paradigm said it had dropped the plans in favour of bringing Tatton solely under internal control, led by ex-Octopus Investments chief investment officer Lothar Mentel.

Anthony Morrow (pictured), partner at Paradigm said: ‘During the process it became apparent to the team that the need to create a joint venture to achieve what we wanted for the business and our partner firms was unnecessary and, as a result, we took the decision to discount that option.’

New Model Adviser® understands the decision is unrelated to the Financial Services Authority’s (FSA) concerns over joint ventures, articulated in a ‘Dear CEO’ letter to 24 providers and networks in October last year.

The regulator expressed concern that firms were finding ways to circumvent adviser charging rules by providing payments intended to secure distribution and influence advice, and that they could place advisers’ duty to act in the best interest of clients at risk.

Henderson is one of the largest fund management players in the joint venture space, and the regulator is understood to be looking into its arrangements among others. There is no suggestion that Henderson has done anything wrong.

Henderson and Sesame Bankhall Group launched joint venture Optimum Investment Management in November 2011, and the fund manager took on Intrinsic’s Cirilium venture when it bought New Star Asset Management in 2009.

Henderson would not comment on whether it had been approached by the FSA over its joint venture arrangements. A spokesman said: ‘We respect what the FSA is trying to do and we work closely with the FSA with all it is trying to achieve.’

Richard Freeman, chief executive of Intrinsic said: ‘We have a joint venture with Henderson that was approved by the FSA. On the back of press coverage, the FSA re-engaged with us about joint ventures in principle, not just on ours, and we are delighted the joint venture is still up and running and is doing well.’