Institutional investment advisory firm, JMIS, has bought the model portfolio and fund sales arm of ASB-owned insurance firm Sovereign, according to industry sources.
If confirmed, JMIS would take control of approximately $600 million of funds under administration, sources say, which have been accumulated mainly via Sovereign’s network of insurance advisers.
Last Friday a Sovereign spokesperson told Investment News NZ (IN NZ) a statement on the sale of its Select Wealth Management service was imminent but later issued a ‘no comment’.
However, the spokesperson declined to deny the rumour.
JMIS was not available for comment.
Auckland-based advisory firm, JMIS, currently provides fund selection, model portfolio construction and customised investment solutions to Select, billed as a “‘wrap account’ that makes sophisticated investing easy”.
The Select funds are administered via the ASB-owned investment platform Aegis.
It is understood Sovereign may have exited Select to avoid licensing as a Discretionary Investment Management Service (DIMS) provider by the May 31 deadline. As at publication date only two providers – the Kiwibank-owned Gareth Morgan Investments and the Todd Family Office – have been granted a DIMS licence.
Under Financial Markets Conduct Act (FMC), Select would be classified as a ‘class DIMS’, leaving Sovereign on the hook for the actions of a wide range of insurance advisers, and others, who use the service.
Under its current Qualifying Financial Entity (QFE) statements, Sovereign-aligned advisers can only give advice on insurance, mortgages and the group’s range of closed investment products.
Sovereign’s June 2011 QFE statement says: “As at the date on which this Disclosure Statement was prepared, the Sovereign QFE does not provide its own new investment products, although it does offer some third-party products and may provide its own investment products again in the future. “Accordingly, if you require advice in relation to a replacement for a closed investment product (including in relation to a third-party investment product offered by Sovereign), please ask your QFE adviser to refer you to an adviser authorised to give such advice. If at the time of your request the Sovereign QFE has started to again offer its own investment products your QFE adviser will notify you of this.”
According to the most-recent Sovereign adviser remuneration document, sales of Select Wealth products can generate upfront commissions of up to 5 per cent.
“On an ongoing basis, an adviser service fee of up to 1% p.a. of the Funds Under Management may also be charged for Custom-Built Portfolios; up to 1% p.a. for Selected Growth Portfolios; and up to 0.5% p.a. for Selected Moderate Risk Income Portfolios,” the Sovereign document says.
JMIS, which formed in 2005 out of Jarden Morgan Investment Services, primarily provides investment advice to high net worth individuals, charities and institutional clients. However, the firm has also launched three portfolio investment entity (PIE) products since 2007, which collectively manage about $100 million – of which roughly $85 million is invested in the Australasian equities ‘JMIS A Fund’.
JMIS is owned and operated by Andrew Kelleher, Ross Jewell and Alan Lee.
While the brand persists, last July the Sovereign insurance entities officially amalgamated with ASB Group (Life).