In a trading update released on 4 July, the wealth manager’s chief executive Ian Mattioli confirmed the group would be withdrawing from the pension transfer industry.
“Following consideration of the increasing costs of professional indemnity insurance, additional regulatory controls and the resources we would have to dedicate to a relatively small part of our business we have decided to withdraw from this market and look to vary our permissions with the FCA accordingly,” Mattioli said.
Performance impact
Mattioli said the impact of the decision on the group financial performance is not expected to be material, “with pension transfer advice to individuals with safeguarded benefits contributing approximately 1.6% of direct revenues for the year, and less to profit given the significant compliance costs associated with this activity”.
The Mattioli Woods update further says the group’s total client assets increased to more than £8.7bn (€9.8bn, $11.4bn) at the end of May 2018, with £2.3bn in gross discretionary assets under management. Also, the group has seen “strong” organic revenue growth of more than 15%.
“Acquisitions remain a core part of our growth strategy. We continue to review a diverse pipeline of potential acquisition opportunities and believe further consolidation within our core markets remains likely. Our strong balance sheet gives us the flexibility to make further value-enhancing acquisitions,” Mattioli said.
Mattioli Woods will be announcing its final results for the year ended 31 May 2018 on 4 September.
Voluntary suspension
The decision to withdraw from the pension transfer industry follows the group’s move to partly suspend the service on 4 June.
In a market update released at the time, Mattioli Woods said it had been in dialogue with the Financial Conduct Authority (FCA) in regards to its industry-wide review of the advice being provided on transfers from defined benefit (DB) to defined contribution (DC) schemes since October 2015.
Firms offering pension transfer advice services have faced rising insurance costs and tougher regulation from the FCA in recent years.
At the beginning of May, professional indemnity (PI) insurance woes forced pension transfer specialist O&M Pension Advice to cease advising clients from 1 July after it ran into “unexpected difficulties” with its insurer.
Barry Honeyman says:
I find this really unsettling. Whilst fully appreciating the scrutiny that DB transfers have attracted in recent months and the need to protect clients from unscrupulous operators, I do feel that limiting the number of options for clients is not necessarily the best answer.