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Old Mutual Wealth pitches WealthSelect as DFM alternative

Skandia has revealed details of its WealthSelect range of discounted funds with an average annual management charge of 0.52 per cent. 

The range will include 42 actively managed funds run under a sub-advised mandate by fund managers Aberdeen, Artemis, Blackrock, Fidelity, Henderson, Invesco Perpetual, JP Morgan, Newton, Schroders and Threadneedle.

It will also include a further 10 multi-asset funds and three passive funds, all run by Old Mutual Wealth.

WealthSelect will be available through the Skandia platform, with advisers given the option to choose individual funds or use a new model portfolio service. 

The discretionary managed portfolio service will be compiled by the Old Mutual Global Investor multi-manager team and offer a range of portfolios which match up to Skandia’s risk ratings of between three and 10.

Speaking to Money Marketing, Old Mutual Wealth global head of distribution Steven Levin says the proposition will be pitched primarily as an alternative to discretionary fund managers rather than a cheap way to access individual funds. He says: “Some advisers will use the funds and access them for the pricing but we would expect most WealthSelect clients to be using the model portfolios.”

The firm has already moved around £1bn in legacy assets held in in-specie funds into the WealthSelect equivalent.

Levin would not reveal the targets that have been set for the volume of new inflows need to make the proposition work.

But he says: “The fund partners would not have signed up if they thought this was going to be a piddly little thing.”

He says in their negotiations with fund groups Old Mutual Global Investors head of multi-manager John Ventre compiled a list of funds which the firm hoped to secure for the model portfolio proposition.

Levin accepts there is a potential for a conflict of interest with Old Mutual Wealth standing to make an increased margin where model portfolios are allocated to OMGI fund managers rather than alternatives with a rival fund manager. He says: “One of the things about the range is we make money out of the platform and all of the funds as well as the Old Mutual funds. But all the fund are there on merit and OMGI has a very impressive track record.”

Levin declined to disclose the margin Old Mutual would take on investments in the sub-advised mandate but adds although around half the entire range is made up of Old Mutual funds, they will only appear in around a third of the models.

The firm has also created a new investment council which it says will ensure the Select range is not biased toward Old Mutual funds. It will include two independent members, Cass Business School asset management chair Professor Andrew Clare, and Andrew Hutton, chairman of the JP Morgan Global Emerging Markets Income Trust and director of the Schroder UK Growth Fund.

On the issue of re-registering assets away from the WealthSelect range, Levin says: “These funds will be on our platform and our platform only, certainly for the time being. These are very attractive prices and the managers have agreed to partner with us because of the holistic proposition we have built.

“We would not be making them available on other platforms without the fund platforms agreeing. If people do want to re-reg, the underlying mandates are available as retail share classes on other platforms.”

If clients were to encash from WealthSelect, they could potentially incur a capital gains tax charge, though Skandia says this would only affect unwrapped investments.

Pilot Financial Planning director Ian Thomas says: “It is a nice model and a simple solution which will appeal to some advisers. But it is better suited to a restricted proposition and I would feel uncomfortable about an investment selection that was influenced by the commercials of price.” 

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