It’s that time of the week again, siblings, and that cruellest time of the year when otherwise intelligent people struggle and fail to adjust the time on basic household devices. (The way to deal with it is to move house, by the way). But that’s it, spring is here, and lilacs will breed out of the dead land; dull roots will be surprised with spring rain. Or at least they will if the temperature gets above 3 degrees which is what it is in Embra at the moment.

(This is top weather banter. It really is.)

So I was going to write about adviser fee models this week, because it winds people up and is therefore fun. It was Schwab’s move to offer a $30pm flat fee planning service that sparked joy in my Updating heart.

But that joy was supplanted by this morning’s news that Quilter, in its bid to buy Really All The Adviser Firms That There Are, has scarfed up Lighthouse for £42m after cash on the balance sheet is taken into account. There are 400 advisers in Lighthouse, so that’s £105,000 per adviser. If you have a look at the annual Quilter results for 2018 (opens PPT in browser) you’ll see that the advice and wealth management arm works on an operating margin of 0.27%.

Basic arithmetic means that each adviser needs to have something in the region of £40m under advice to wash their face in terms of acquisition cost (this is far too simplistic but it’s early). If you do that over a few years, it’s obviously a fair bit less.

This looks like a pretty smart acquisition on that basis, so long as the team at Quilter can drop the Lighthouse boys and girls into its own model.

I was talking to a nice guy from a big adviser firm (not Quilter) the other day about transferring clients in bulk from platform to platform and how much admin heft and FIREPOWER (sorry) it takes to move, say, £100m from Here to There on an advisory basis. His view, which wasn’t arrogantly expressed in any way, was that he simply didn’t see how ‘normal’ sized advisory firms could keep up with everything they’re expected to do, have good processes and still write business, serve clients and all the rest.

There’s nothing new under the sun; advice firms used to be part of big organisations. It’s anathema to many, but it does feel like we are entering the whirlpool once again.

And that’s where we come back to this big change from Schwab (it all links; I see crowds of people walking round in a ring). On the basis that what starts off there often ends up here, and that financial planning darling Michael Kitces has also been trumpeting the fixed fee subscription model over here, albeit at several times the Schwab cost, I do wonder if we are heading into an environment where these big firms start to flex their muscles a bit and really create some distance in terms of fees for advice between them and smaller independent businesses.

But you can’t predict these things. Not even Madame Sosotris, famous clairvoyant with her wicked pack of cards, could do it.


  • First up, congrats to Aileen Mathieson, ex FD of Nucleus, CIO of Zurich and all round top individual on her new impressively titled gig at Aberdeen Standard Investments. I think it’s Supreme Allied Commander or something like that.
  • I’m pleased to see that the charlatans behind London Capital & Finance are in hot water. And while I’m unsurprised that the regulator couldn’t get to grips with it, it’s good to see them taking a look in the mirror too.
  • A development to last week’s Update about the DB transfer Dear CEO letter from Michael Klimes at Money Marketing – nine firms clearly in the spotlight. You wouldn’t fancy being one of them, I think.
  • Speaking of Money Marketing, good luck to them and their fellow colleagues at Headlinemoney, Taxbriefs, Platforum and the rest as they leave Centaur and head for Metropolis. It’s Shoreditch or Croydon…
  • The music slot isn’t music this week. You might have spotted some stuff from your English lessons earlier throughout this week’s Update. Here’s Jeremy Irons and Eileen Atkins doing it properly. It, of course, being The Waste Land.

Shantih shantih shantih