Manchester-headquartered Frenkel Topping Group has said that the firm will not be using the net proceeds from its placing to buy IFA firms.
The specialist wealth manager raised £13m ($16.5m, €14.3m) on 22 July via a placing of 32,500,000 of new ordinary shares, which were issued at £0.40 per share.
The company said the net proceeds will be used to accelerate its vision of becoming the “market leader” in providing a full service offering to clients and claimants, particularly in personal injury and clinical negligence.
It wants to buy professional services firms.
Not for us
Richard Fraser, chief executive of Frenkel Topping Group, told International Adviser: “We are not looking to buy financial advice firms. We looked at the IFA market but we just feel this is a better strategy for us.
“There are a lot of companies coming into the space and we are worried about the defined benefit issue. The Financial Conduct Authority (FCA) is looking at this in finer detail, so we are concerned about that and the legacy problems you have with DB transfers.
“I have seen some decisions from the Financial Ombudsman Service (Fos) which seem to be totally against the IFA. You would think the IFA has done everything right, but somebody has complained and Fos has found in favour of the claimant.
“We don’t have an issue with professional indemnity (PI) insurance. But I know talking to our brokers that the PI market is hardening, some of the insurers have pulled out, it is getting more expensive, the excesses are going up and cover is getting harder.
“You put all that together and it is just not for us.”
This comes days after IA reported on a webinar by consultancy firm Gunner & Co, which said DB transfers still causing headaches as due diligence is more thorough than ever.
Graduates in place
The firm believes that the “better strategy” will be to buy firms to broaden its professional services operation to help the IFA arm.
It has been in the personal injury and clinical negligence marketplace for more than 40 years.
“We are looking at the pre-settlement professional services market, like accountancy firms,” Fraser added. “This is because, the more pre-settlement firms we can buy, it will drive work into the IFA business. I am not aware of any other IFA doing this at the moment.
“We know we have around £80m plus of AuM to convert. It gives us that pipeline of work coming through for the IFA business.
“Our graduate scheme has been so successful and we have a lot of IFAs coming through to write the additional business.”