Net Client Cash Flow (NCCF) of £3.7 billion in 2014 (2013: £2.3 billion) was 61% higher than prior period driven by strong demand for investment solutions from Old Mutual Global Investors and the new WealthSelect investment service on the Old Mutual Wealth platform. Gross sales increased by 11% to £16.0 billion (2013: £14.4 billion) and funds under management hit a new high of £82.5 billion at the end of 2014 (2013: £78.5 billion) due to good fund performance and strong NCCF across the year.
Growth in all key metrics was achieved notwithstanding the disposals of businesses in Poland, Germany and Austria made during the course of the year. Old Mutual Wealth is now focused on its core UK and cross-border markets and has made significant progress on its strategy to build an integrated wealth management business. It acquired Intrinsic and Quilter Cheviot and now has an integrated customer offering encompassing financial advice, platform and products, investment management and asset management.
Financial advice - Intrinsic
Old Mutual Wealth believes most people benefit from professional financial advice. It currently works with 9,000 financial advice firms in the UK and reinforced its commitment to growing the financial advice sector with the acquisition of Intrinsic on 1st July 2014. Old Mutual Wealth’s UK Platform and personal protection products and elements of the OMGI fund range have been added to Intrinsic’s product panel for its 930 restricted advisers. Intrinsic’s total advisor count was 3,050 at year end.
Cirilium, the fund range at the centre of Intrinsic’s investment proposition, generated £179 million NCCF between 1st July and the year end and is now operated by Old Mutual Global Investors. Intrinsic has recently launched a Practice Buy-Out initiative which will enable advisers to grow and realise value from their business, which in turn supports a healthy financial advice sector.
Platform and products – Old Mutual Wealth
The UK platform saw profit increase to £19 million (2013: £13 million) with NCCF of £2.0 billion (2013: £2.4 billion) and gross sales of £5.1 billion (2013: £4.7 billion). The new WealthSelect investment service launched in February has been very well received by financial advisers with sales of £0.8 billion at the year-end, 96% of which is held in the free managed portfolio service. ISA sales benefited from the increased ISA allowance and were 21% up on prior year.
Personal pension sales were 14% higher than prior year and earlier this month Old Mutual Wealth announced the launch of a new flexi-access drawdown facility on its platform pension which it expects to be in high demand when the new pension freedoms come in to effect on 5th April 2015. UK Platform assets ended the period at £30.8 billion (December 2013: £27.3 billion), up 13% since the start of the year.
Investment management – Quilter Cheviot
In 2014 Quilter Cheviot performed in line with expectations with funds under management ending the period at £16.7 billion, 10% higher than prior year. Net client cash flow was £1.1 billion (2013: £1.1 billion). These figures are not included in the overall Old Mutual Wealth figures as the acquisition only completed on 25 February 2015.
Asset management – Old Mutual Global Investors
OMGI profit more than doubled to £33 million during 2014 (2013: £15 million), including £2m from Cirilium in 2014. NCCF of £2.5 billion was significantly higher than prior year (2013: £0.7 billion) and gross sales of £9.2 billion (2013: £7.6 billion) were 22% higher than prior year. Sales were strong through UK and international third parties as well as the Old Mutual Wealth platform.
The Global Equity Absolute Return (GEAR) fund was the top selling fund in 2014 with sales of £1.7 billion, demonstrating its popularity with investors as equity markets remain volatile. The UK Alpha fund was the next most popular investment choice in 2014 with sales of £1.1 billion. The multi-asset Spectrum fund range delivered £0.6 billion of sales in the year and sales into WealthSelect were £0.8 billion in 2014.
OMGI funds under management, including Cirilium, was £21.0 billion (2013: £16.0 billion), up 31% on the start of the year. Investment performance was market leading, with 70% of OMGI core funds in the first quartile over a three year period and a total of 84% of funds above the median.
Paul Feeney, chief executive of Old Mutual Wealth, comments:
“During 2014 we made great progress in aligning our business to what we believe customers need to help them secure their financial future. People don’t wake up in the morning thinking about platforms or individual funds. They think about how they are going to fund their retirement or their children’s school fees; things that mean something to them. For that they need advice, the right product, a great performing investment portfolio and excellent service.
“Increasingly I believe advisers and their clients will be looking to source those elements in one place, via companies that can offer an integrated proposition efficiently and cost effectively. That is what we are aiming to achieve and we will continue to work with advisers to build new products and services that they and their clients need.”
Old Mutual Wealth data tables
1. Includes Protection, Series 6 pensions, and UK Institutional business
2. Old Mutual Global Investors includes £2 million Cirilium profit in 2014
3. Includes business written in France, Italy and Poland
4. Includes UK Heritage and Europe Heritage book (Germany, Austria, Switzerland and Liechtenstein)
1. UK Platform FUM excludes intra-Group assets from our International business of £1.5 billion in 2014 (2013: £1.5 billion)
2. Includes Protection, Series 6 pensions and UK Institutional business
3. OMGI redemptions include Nordic sale-related net outflows of £0.2 billion in 2014 (2013: £1.0 billion)
4. OMGI and intra-Group eliminations include gross inflows from Heritage business of £0.5 billion in 2014 (2013: £1.2 billion)
5. OMGI FUM includes £0.1 billion of shareholder assets in 2014 (2013: £0.1 billion)
6. Includes business written in France, Italy and Poland
7. Includes UK Heritage and Europe closed book (Germany, Austria, Switzerland and Liechtenstein)
8. FUM in 2014 has been reduced by the disposal of the Polish, Austrian and German businesses
9. Assets and flows managed by OMGI on behalf of other Old Mutual Wealth businesses