Newly-launched wealth management boutique Yellow Capital says the RDR has "scared the living daylights" out of advisers and has set out plans to acquire IFA businesses exiting the market.
Director Haydn Ellwood says the fee-based company is looking to purchase around three IFA businesses and is on the verge of buying a five-man firm with £250m in assets under influence.
"Our primary growth strategy is through acquisition and merger," he says. "The RDR has frightened the living daylights out of advisers and we see an opportunity to acquire the businesses of IFAs looking to retire."
Ellwood says his firm, which specialises in investment portfolio management to high net worth clients, has also identified a gap in the market created by private banks which he says are consumed with "selling to capture an audience".
"People are upset with banks and need proper financial planning - that is our niche. A lot of discretionary managers and IFAs also fail to focus on financial planning and just do asset gathering. But this should come before investment decisions - it is a layer cake."
After acquiring the businesses, Yellow will conduct reviews of those firms and put in place RDR-compliant systems.
Central to its acquisition strategy is a share option scheme giving advisers an equity stake in the business.
"We want to keep a strong bond between IFAs and their clients and if advisers own a piece of the business they will be encouraged to stay for several years," he adds.
Yellow Capital outsources its discretionary fund management to London-based Independent Portfolio Managers and also constructs its own portfolios with an investment strategy combining a passive and active approach.
It steers clear of structured products, which Ellwood says run the risk of "falling like a pack of cards" in the event of another financial crisis.
The firm predominantly uses the Transact platform which he thinks provides the best value for money. Three of the firm's clients are also on Cofunds.
Fundamental to Yellow Capital's investment strategy is a belief in gold, with all clients having an allocation of between 5-15% to the precious metal. This includes physical gold, ETFs and gold mining shares.
This week, gold has surged to near-record highs on the back of currency devaluation fears.
"The euro, pound and sterling have all come under stress recently," says Ellwood. "Gold in its physical form is the ultimate. It is not absurd to say one day these currencies could collapse."
Despite Yellow Capital targeting clients with a minimum net worth of £1m, Ellwood says it is regulatory pressures which are pricing the mass market out of the adviser realm. He thinks consumers will soon be forced to buy pensions and ISAs from the likes of Tesco.
"The FSA is creating the divide between those who can and those who cannot afford advice," he says. "We obviously want to do more for the mass market but it has to be economically viable."
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