Dabbs says the most challenging aspect of the acquisition, part of Old Mutual’s strategy to pool its efforts into two core Asian markets, has been integrating AAM’s existing systems with that of the insurer’s.
“We’ve had to step up controls and internal risk management, for example, by beefing up our finance team and its reporting. We’ve had to create a lot more data that can be processed to improve procedures.
“There has been a lot of benefit but it has been a bit like having a tooth removed. As they say, ‘welcome to the corporate life’.”
Asset management
One of the biggest impacts of selling to a FTSE 100 company has been relinquishing AAM’s investment management to Old Mutual, which took over the business’s core model portfolios – $30bn ($38bn, €35bn) of multi-asset funds – from its offices in London.
“Old Mutual obviously has more resources. We had a three-man team running our model core portfolios from Singapore, and now there are 200 staff,” says Nick Anderson, one of AAM’s three executive directors, including Lee Sanders and Kelso Beggs.
It means a big boost for the firm’s 4,400 clients, who will now receive quarterly “private banking-type” reporting, which “drills down to everything that’s in the portfolio”.
Having been in the market for a buyer since mid-2014, AAM, which has some 4,400 clients, welcomed the takeover due to Old Mutual’s track record of supporting advisers in the UK as well as offering lump-sum life policies more suited to Singapore’s fast-changing advisory model.
Managing conflict
The life insurer purchased Intrinsic, the UK’s largest network of restricted and independent financial advisers, in February 2014 for £98m. It has since invested an additional £25m to expand the number of staff in the network, as well as buying the Financial Adviser School in February from UK-based Sesame Bankhall Group.
Anderson says he was particularly impressed with Old Mutual’s exit strategy for advisers in Singapore. “One of the issues for advisers is having an exit strategy if you want to leave the industry or retire. Like they do with Intrinsic in the UK, Old Mutual Wealth facilitates a practice buyout if an adviser wants to leave Singapore, or leave the industry, then they can sell their client bank to one or more of the other advisers, even if it is 10 or 20 years away,” he says.
Asked how the firm navigates the pot- ential conflicts of interest that inevitably arise from an international life office owning an independent advisory firm, Dabbs refers to Singapore’s stringent regulations that require advisers to disclose such matters to clients.
“If we recommend an Old Mutual product, we must disclose in the statement of advice there is a conflict of interest and explain the reason why we’re recommending it.
“We explain that we offer the product or give advice on the product because we can get it cheaper than anybody else,” he says.
Dabbs is also keen to reassure clients, 80% of whom are British or Australian expats living in Singapore, that when it comes to product offerings, the firm uses Old Mutual for its lump-sum life policies but “everything else is very much open”, including platforms from other international insurers.
