Schroders says it is not adopting a strategy of buying up distribution following its investment in network Best Practice and its parent company Benchmark Capital.
Fund Strategy’s sister title Money Marketing revealed last week Schroders has taken a “significant” stake in Benchmark Capital for an undisclosed sum.
As well as network Best Practice, Benchmark Capital includes chartered IFA Aspect 8, network and chartered financial planning firm Evolution Wealth, its platform Fusion Wealth and technology firm Creative Technologies.
Under the terms of the deal, Schroders group chief executive Peter Harrison will join the board of Benchmark Capital as chairman. Schroders intermediary director Robin Stoakley and global head of wealth Andrew Ross will also join as non-executive directors.
Ian Cooke will remain a core owner of the business and will continue as chief executive of Best Practice and Benchmark Capital. He says Best Practice and Aspect 8 will continue to offer independent advice.
Asked whether the move signalled a move into the vertical integration models run by the likes of Old Mutual Wealth and Standard Life, Schroders UK intermediary co-head James Rainbow says: “If you think about the underlying motivation for what those firms is, there is a strong element which is about the depth of the relationship. This is not about us pursuing a vertical integration strategy. But it is important to broaden the range of opportunities and services we can provide to our core intermediary client base. It is not about imposing things, but offering more choice.”
He says the relationship between Schroders and Cazenove, the wealth manager Schroders acquired in 2013, demonstrates its commitment to independence.
Both Schroders and Benchmark Capital have ruled out launching a direct-to-consumer service as part of the deal.
Cooke says: “We enable firms to do D2C, we don’t do D2C ourselves. Benchmark has grown to service the adviser and wealth management market. Our D2C platform is about helping advisers to digitise their businesses and build in efficiencies.”
Cooke says what excites him about the deal is the opportunities for international expansion.
He says: “We already power firms in Hong Kong and Singapore, but only with back-office systems. With Schroders we have the ability to power platform solutions as well.
“We looked at other routes to push our business forward, but there was a strong cultural alignment with Schroders. It also gives us international opportunities that we didn’t have access to before.”
The deal is expected to complete early next year.