Old Mutual Wealth, comprising Skandia, Skandia International and Old Mutual Global Investors, reported an increase in operating profit of 11 per cent for the first six months to £120 million ($202.29 million), up from £108 million from the first half last year.

Old Mutual Wealth, comprising Skandia, Skandia International and Old Mutual Global Investors (OMGI), reported an increase in operating profit of 11 per cent for the first six months to £120 million ($202.29 million), up from £108 million from the first half last year.

The firm said in its half-yearly statement that net client cash flow increased by 50 per cent for the first six months to £1.2 billion, while funds under management rose from £78.5 billion at the end of December to £80.3 billion.

According to Old Mutual Wealth, this increase was a result of its new Skandia WealthSelect offering, as well as its funds UK Alpha and Global Equity Absolute Return.

“The launch of WealthSelect this year is an example of how we can use our platform and asset management expertise to build a service that gives advisers a range of managed portfolio solutions aligned to their clients’ needs. WealthSelect has already taken over £200 million in new investment – a clear sign that advisers and their clients value the proposition,” said Paul Feeney, chief executive of Old Mutual Wealth.

Skandia

The Skandia UK platform saw gross sales increase 11 per cent on the prior year to £2.5 billion, as a result of high demand for investment solutions such as Spectrum and WealthSelect.

The platform recorded a profit of £10 million for the first half, up from £2 million during the same period last year, while funds under management increased 5 per cent from the start of the year to £28.8 million. Net client cash flow was 31 per cent lower than the previous year at £0.9 billion, down from £1.3 billion.

Old Mutual said that the proposed changes to the pension rules in the UK were a “major boost” for Skandia. The firm said that it had seen queries into its pension transfer service double since the announcement and that three quarters of advisors had reported an increase in pension or retirement income enquiries.

International

Skandia International, the cross-border business of Old Mutual Wealth, reported a drop in sales of 4 per cent to the prior year of £892 million.

Funds under management increased 1 per cent to £15.1 billion, while adjusted operating profit was 26 per cent down on the first half of 2013 at £23 million, impacted in part by the adverse foreign exchange movements against the dollar and euro which reduced earnings by approximately £5 million compared with the previous year.

Sales in Old Mutual Wealth’s European open book delivered logged increased profit of £14 million, 27 per cent higher than 2013, driven by higher funds under management and increased efficiencies in Italy. Old Mutual Wealth also completed the sale of Skandia Poland and confirmed the sale of Skandia Germany and Skandia Austria during the period. Old Mutual Wealth’s heritage business, which includes the legacy business in the UK, recorded an adjusted operating profit of £53 million, flat in comparison to 2013.

Intrinsic deal

Earlier this month, Old Mutual Wealth won regulatory clearance to acquire Intrinsic after a deal had been initially announced earlier this year.

The acquisition, the purchase price of which wasn’t disclosed, is part of a continuing round of M&A activity to have affected wealth management in the UK as new regulations and other pressures have driven firms to seek economies of scale.

“The acquisition of Intrinsic during the period was a significant milestone in our plans to become a leading investment solutions provider. Building the solutions is one thing but we need to make them more accessible to people and have a direct understanding of what they want. Intrinsic enables us to do that and is an important addition to our business," said Feeney.

The deal brings together Intrinsic’s network of 3,000 independent and restricted advisors with Old Mutual Wealth’s investment platform and asset management solutions. The deal is a sign of the kind of industry consolidation happening in the wake of the UK’s Retail Distribution Review.

“Preparations are well under way for us to start using the Old Mutual brand in the UK at the end of September and internationally at the beginning of next year. This marks a tipping point in our transition from primarily a platform provider to a broader investment solutions provider,” said Feeny.