Old Mutual Wealth’s gross sales increased by 16 per cent to GBP4.6 billion in Q1 2015 (Q1 2014: GBP3.9 billion), with pension sales particularly strong and the benefits of its vertically integrated model becoming evident.
Net client cash flow (NCCF) during the quarter was GBP1.0 billion, 9 per cent lower than prior year, and when the planned loss of a lower margin institutional mandate is taken into account, underlying performance is 8 per cent ahead of Q1 2014.
Funds under management (FUM) stood at GBP102.3 billion at the end of the quarter, boosted by the acquisition of Quilter Cheviot which completed during the period and added GBP17.5 billion. Excluding acquisitions and disposals, funds under management increased 5 per cent from the year end due to positive NCCF and strong market performance.
NCCF on the UK Platform of GBP0.6 billion was 18 per cent higher than prior year (Q1 2014: GBP0.5 billion) and gross sales of GBP1.4 billion were 15 per cent higher (Q1 2014: GBP1.3 billion). ISA sales were strong over the tax year end and pension sales of GBP0.6 billion were 40 per cent up on previous year as people transferred to the Platform to take advantage of the wide range of investment solutions and flexible income options. UK Platform assets were GBP33.0 billion, up 7 per cent since the start of the year (December 2014: GBP30.8 billion).
Demand for financial advice also increased significantly due to the incoming pension reforms with pension and annuity sales at Intrinsic up 23 per cent compared to Q1 2014. Overall, total sales at Intrinsic were up 65 per cent in Q1 2015 as it continues to recruit high producing financial planners into its network.
Sales of fund ranges managed by Old Mutual Global Investors (OMGI) were strong during the quarter. NCCF into the Cirilium fund range via Intrinsic was GBP0.2 billion, double that achieved in Q1 2014, and WealthSelect added GBP0.3 billion via the UK Platform in Q1 2015 compared to a quarterly run rate of GBP0.2 billion over 2014.
OMGI gross sales of GBP2.6 billion were up 5 per cent on last year (2014: GBP2.5 billion). NCCF of GBP0.8 billion is 27 per cent down on prior year (2014: GBP1.1 billion), with Q1 2014 including a GBP180 million segregated mandate inflow and GBP305 million seeding of the Foundation fund range. The Global Equity Absolute Return fund continued to perform well, and has again been the top selling fund in the quarter with net inflows of GBP0.6 billion.
OMGI investment performance remains very good, with 60 per cent of core funds in the first quartile over a three-year period and a total of 84 per cent of funds above the median. OMGI FUM was GBP22.5 billion, up 7 per cent on the start of the year (December 2014: GBP21.0 billion) and now represents 22 per cent of the total Old Mutual Wealth FUM.
Old Mutual Wealth also performed well in its international markets during Q1. Old Mutual International’s NCCF of GBP128 million is 44 per cent higher than prior year (2014: GBP89 million) and gross sales of GBP0.5 billion were 10 per cent higher (2014: GBP0.4 billion). In January, it launched its Wealth Management Plan in Hong Kong to take advantage of the new regulations in that market.
NCCF of GBP178 million in Old Mutual Wealth Italy was significantly higher than prior year (2014: GBP25 million). Gross sales of GBP0.4 billion are 56 per cent higher than the same period in 2014 (2014: GBP0.2 billion) following an expansion of a distribution agreement with a major bank. The sale of businesses in France and Luxembourg to APICIL completed on 2nd February 2015.
Paul Feeney, chief executive officer at Old Mutual Wealth, says: “The pension freedoms have been like a shot of adrenaline to the financial services industry. Even before they were introduced we saw increased demand for financial advice, flexible pension products and packaged investment solutions as people got ready for the changes. Our research shows that 81 per cent of over-55s are aware of the new freedoms, indicating the reforms will encourage more people to take advantage of the benefits of saving into a pension. We hope the new Government will recognise the benefit of continuity – further changes risk dampening appetite for long-term saving and creating additional complexity in the pension taxation system.
“One thing that is very clear is that we will continue to see strong demand for financial advice this year as people embrace new and more flexible ways of funding the later parts of their lives.”