Pacific Asset Management (Pam) and chartered financial planning firm Fidelius Group have entered into a strategic partnership that they say will allow them to re-focus on their respective strengths and add scale.
Pam, which has £1.2bn ($1.52bn, €1.34bn) assets under management, has acquired Fidelius’s discretionary fund management (DFM) arm, Parallel Investment Management, and taken on its range of risk-targeted portfolios.
In turn, Bath-headquartered Fidelius, which also has offices in Cheltenham and Chelmsford, has taken on Pam’s financial planning arms, Chartered Financial Management and Zen Wealth, which PAM acquired in 2018 and 2019 respectively.
The addition of the two companies takes Fidelius’s assets under advice to £1.8bn.
The financial terms of the deal were not disclosed.
Different
PAM chief executive Matthew Lamb told our sister publication Portfolio Adviser: “One of the things that we’ve always felt when it came to asset management was a significant part of the alpha was in the advice.
“I think asset management as a whole has probably overvalued its portion of the clients’ outcome. We recognise that and as an asset manager we wanted to admit that.
“We got into a relationship with Chartered Financial Management two years ago and one of the things we realised is running a financial planning business is very different to running an asset management business.
“We felt Fidelius was a fantastic home for the guys at Chartered Financial Management to continue to grow and develop their business.”
Hindered future growth
Fidelius Group chief executive Jim Grant told PA handing the DFM business to Pacific removed a lot of the aggravation adviser firms face in running their own fund management businesses such as reporting, rebalancing and fund performance.
Grant said the deal also alleviated Fidelius of the capital adequacy constraints it faced as an adviser firm with a DFM license which hindered its ability for future growth.
“It releases some of the some of the shackles to allow for us to acquire and grow the business organically, which has been a bit trickier over the last two or three years,” he said.
“It makes very much more sense to have somebody else run the investment management portion. We remain interested in investment management as part of the solution for our clients but that doesn’t mean to say that I need to run the whole thing from an investment management perspective.
“When the opportunity came up for us to take the two financial planning businesses from Pacific, and for them to take the investment management business from us, we each seemed to sort out a number of the longer-term issues that we were going to face.”
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