June 11, 2020
Pacific Asset Management has entered into its largest strategic partnership to date, which will see the investment manager acquire Chartered financial planner Fidelius Group's DFM arm Parallel Investment Management. The partnership will also see Pacific take on Fidelius' range of risk-targeted model portfolios, while the Bath-based Chartered financial planner will take control of the investment manager's financial planning firms.
Growing its £1.1bn assets under advice (AUA), Fidelius will take charge of £250m AUA Chartered Financial Management (UK) and £30m AUA Zen Wealth, which Pacific acquired in July 2018 and 2019 respectively. Under the agreement, Pacific will take on Parallel's model portfolios, which are understood to have represented about £400m in assets under management prior to the ongoing coronavirus crisis, in addition to its investment team. Parallel will maintain its own branding.
Pacific AM CEO Matthew Lamb told Investment Week the deal would see both firms own a "similar share" of each other's businesses. He added that "having a relationship with a firm of [Fidelius'] size, quality and calibre will be important" in the years to come "for any asset management business". He explained: "Asset managers have notoriously overvalued their own role in the client journey and undervalued advice. We have always believed that a very significant portion of the alpha comes from advice. "In the ever industrialised world of asset management, advice, structuring and planning,particularly going forward with tax planning, will be more important than ever. "In simple terms, this partnership allows all of us to focus on our core strengths."
Fidelius Group chief executive Jim Grant told Investment Week the deal would aid his"ambition" to see Parallel grow.He added: "Equally, AUA Chartered Financial Management and Zen Wealth will do better [by] being part of a bigger financial planning group, than sitting within an investment management business."We can see a way that we can build and work together to grow a number of things moving forward, and create some great outcomes for clients."
With regard to CFM and Zen Wealth, Grant said both are "high quality, profitable businesses which have long shared our 'client-first' ethos", and the partnership with Pacific "will bring significant cost benefits to clients, strengthen our investment offering and add value to our advisers".He added: "We have created a business model, in conjunction with PAM, which will be attractive to advice firms that share the same core beliefs as us, that is; providing a complete financial planning service to clients, as well as retaining and building value for the future."