Chamberlain: Time to stop the great asset giveaway

Advisory firms must wrest back control of their clients’ assets from fund houses and insurance companies or risk “perpetuating the crime” of devaluing the distribution chain, Succession CEO Simon Chamberlain says.

He said that for years distributors have passed control of their clients’ money to asset managers, boosting their AUM and stock market value while diminishing their own.

However, he said the emergence of platforms and the Succession model in particular, which encourages member firms to move the assets into model portfolios run by its chosen discretionary managers, enables IFAs to “shift the capital value back to where it belongs”.

“A crime has been committed,” said Chamberlain at the asset consolidator’s annual conference in Devon.

“If you combine the values of all the fund management groups and insurance companies listed on the stock market, it is more than £50bn. Distributors, on the other hand, are worth less than £50m.

“The reason the value is so different is because the distributors have given away all of their value, as far as the funds are concerned, to the insurance companies.

“This is the only industry in the world where the distributors don’t hold the value.”

Launched in 2009, Succession invites advisory businesses to adopt its fee-based “RDR-ready” processes, including its ‘investment matrix’, which is designed to maximise firms' renewal income.

It acquires a 15% stake in each company, with the aim of consolidating them on 1 June 2013, in what Chamberlain said would be the “biggest capital event the industry has seen”.

Members will be purchased at a minimum of six times the recurring income generated from their assets on Succession’s platform, added to three times the value of assets not on the platform. The capital event also offers principals an exit strategy.

So far, 35 firms with some £5bn in assets under influence have signed up, but Chamberlain aims to attract a further 50 businesses.