Quilter chief executive Paul Feeney did not pull any punches when New Model Adviser® asked him about his company's restricted advice model.
‘There are 7,000 UK-registered mutual funds in this country and another 31,000 international funds sold. I have been in the industry for 30 years; anyone who can tell me they can choose the best fund is an idiot or a liar. There is no such thing,’ he said in an exclusive interview following the publication of Quilter's first half year results.
Feeney (pictured), who led Quilter’s separation from its South African parent Old Mutual plc and subsequent listing on the London Stock Exchange this year, defended a restricted model that saw Quilter’s ‘integrated flows’ reach £2.8 billion in the first half of 2018. These integrated flows mean a client invests in two or more parts of Quilter’s product set which includes advice, discretionary fund management, a platform and asset manager.
The knock on benefits for different parts of the business are clear; the multi-asset arm saw 78%, or £1.4 billion, of net flows from Quilter Financial Planning (formerly Intrinsic) in the first half of the year. This ‘principally’ came into the in-house Cirilium and Generation fund ranges.
A vertically integrated model might appeal to analysts and investors but some advisers have questioned whether clients always get the best deal from such a model, especially when advisers are restricted to a certain number of funds.
‘Personally I hate the term restricted financial planning, I think it is pejorative,’ Feeney said. ‘It is controlled financial advice. You control every other part of your business; you control your product quality, you control pricing, you control the quality of your investment management, why wouldn’t you control your financial advice?
‘We have a strong financial planning business and we stand by the advice that we provide, we wouldn’t do it if we didn’t think it was good,’ he added.
Although vertical integration has been criticised by independent advisers, the Financial Conduct Authority (FCA) platform market study’s interim report did not make any criticism of the model.
‘My understanding is it [the FCA] didn’t dwell upon them because they didn’t find anything to dwell upon,’ Feeney said.
‘There are two outcomes the regulator quite rightly looks for; one is suitability and the second is that it is delivering the right outcome for the client based on the promise it makes – that is what we try to do. Don’t forget we are a multi-asset manager, we sold our single asset strategy business (OMGI), so our portfolios can range right across the market seeking what they consider to be the most appropriate funds to combine to meet our clients risk objectives and overall outcome objectives.
‘Anyone who says how do you know this is the best fund in the market, doesn’t understand the market.’