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How Sanlam plans to benefit from consolidation trend

As featured in Citywire with comment from Lukas van der Walt, CEO of Sanlam UK

Sanlam UK’s chief executive Lukas van der Walt expects the wealth management sector to consolidate in a similar manner to the accountancy industry – and he hopes to benefit from this trend.

He is well positioned to comment, given Sanlam’s position as an industry consolidator.

‘'A couple of big players will dominate financial services who can actually afford systems. You need to transform these businesses into relationship businesses and not just transaction businesses,’ he said.

'Because of the cost of advice, it is very difficult to provide for a big segment of UK clients who need that advice on a face-to-face basis. So we need to find an alternative mechanism to provide it.

‘If you look at an integrated wealth management business, the part that requires the most investment is the platform and the products business. It naturally follows that if you want to be a successful wealth management business, then you have to be bigger because you need a lot of capital and investment.’

Van der Walt is already thinking about the company’s next step following its recent acquisition of Caerus Portfolio Management. He believes Sanlam Private Wealth, which administers over £2.3 billion, can continue to build scale and not just survive but thrive in a changing regulatory environment.

'We can strategically position ourselves as one of the players. I think regulation is obviously more expensive and it is increasing standards, but it makes it more difficult for smaller businesses. I have a positive view on sound regulation and strategically it helps a business like ours.

‘It is very difficult for a newcomer to come in if the existing incumbents are very successful. It is only during a period of change that newcomers like Sanlam can come in and grow and adapt to the change. We have the opportunity to set the trend in terms of client expectations and behaviour.

‘Sanlam is still relatively small in UK financial services. Our biggest threat is scale, but [that is] also our biggest opportunity,’ he said.

Organic growth will be complemented by further acquisitions and partnerships, the chief added.

In June, Sanlam acquired wealth management firm Caerus Portfolio Management (CPM). It also bought a 19.9% stake in CPM’s parent, Caerus Holdings, the firm’s advisory business.

Van der Walt said acquisitions and partnerships, alongside a recent agreement with platform Nucleus, have all delivered scale so far.

The biggest challenge has been the integration of different businesses, while establishing the brand in the UK at the same time.

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