Almost a year ago (November 7 2024) I wrote about the collapse of the “Old Mutual of Australia”, AMP Ltd. It now occupies only a few floors of its distinctive skyscraper head office in Sydney.
Old Mutual itself is not well-rated on the JSE and could be called the sick man of the insurance sector. The simplest indicator is that its market capitalisation of R65bn is now less than half that of upstart Discovery (R145bn) — which many of us don’t consider to be overvalued by any means — and behind the even younger Outsurance (R115bn).
And this is quite a contrast to Australia, where AMP was allowed to buy its historic rival National Mutual, the “Sanlam of Australia”, which at the time was in even more trouble than AMP. The combined life insurer was to end up in that serial acquirer of closed life insurance books, Resolution Life.
Sanlam itself, as we know, is a dark blue chip, with a market cap more than three times that of Old Mutual. It has reinvented itself from a life office to a major player in many parts of the savings value chain. Sanlam operates under a bewildering spider’s web of subbrands. The posh end of its agency force has been rebranded BlueStar. In contrast, there is nothing left of the AMP or National Mutual agency forces in Australia.
Sanlam seems to have been more successful at capturing business from independent financial advisers than its rival Old Mutual. At the top end of the market, Glacier, the investment platform, is the hub, and Sanlam provides model portfolios to financial advisers through several vehicles — Graviton and Glacier Invest being the most visible.
Monobrand approach
Old Mutual largely operates on a monobrand strategy, particularly in its mass market business, originally called group schemes. Australian life offices don’t have this line of business — at least not to anywhere near the same extent — being based in a developed country.
Old Mutual remains the dominant player in the funeral policy market, despite Capitec’s aggressive launch of a competing, and generally cheaper, product.
Old Mutual has much more competition at the top end of the market. Some might question whether a middle-market brand such as Old Mutual can stretch into the affluent market, where it competes with the likes of Investec Wealth & Investment and Citadel. Old Mutual Wealth MD Farhad Sader says that probably the closest business in the market to Old Mutual in terms of distribution and product architecture is PSG Wealth.
In many one-horse towns the most visible options for financial planning are the local Old Mutual agent and the local PSG franchise.
Old Mutual itself is not well-rated on the JSE and could be called the sick man of the insurance sector
Old Mutual’s attempt to be seen as a more sophisticated brand probably dates back to its 2009 purchase of Andrew Bradley’s Acsis business — ironically, a franchise of an Australian business, Ipac. Perhaps if AMP had done the same thing in Australia, it would still have a thriving advisory force.
Old Mutual was certainly a latecomer to bespoke private client portfolio management, which it only started offering officially as Private Client Services two years ago, while Sanlam offered bespoke services more than 20 years earlier, after it acquired a number of stockbrokers.
Until a managed separation in 2018, the Old Mutual Group offered its private banking services through its subsidiary Nedbank.
And now, even though Old Mutual has launched OM Bank, the new lender has no plans to offer red-carpet private banking services.
But while it doesn’t lend money to elite clients, Old Mutual offers the full suite of investment products. And it by no means takes a “green only” approach biased towards home-grown products.
Sader says personal financial advisers — the euphemism for common-or-garden tied agents — are obliged to use the Old Mutual Wealth linked investment platform, though once they are on it, they have an array of choices. These include the bulk of Old Mutual’s main competitors, even Sanlam — though the Sanlam active funds are now being collapsed in the Ninety One range.
Revival of Symmetry
In June, Old Mutual revived the Symmetry brand for investment products that aren’t managed in-house to avoid confusion with products managed by subsidiaries such as Old Mutual Investment Group and Futuregrowth.
Symmetry was even allowed to use orange, not green, as its corporate colour. Symmetry is a much less clunky brand than Old Mutual Multimanager (OMMM). And Sader concedes that many people in the media never stopped using the Symmetry brand.
He says Symmetry will be much more than just a traditional multimanager (designed primarily for pension funds, along the lines of the former Alexforbes Investment Solutions) as it will include a discretionary fund manager — in effect a multimanager focused on retail advisers. The third leg of Symmetry is in the overtraded, frankly, “best of breed” sector in which a mandate is awarded to the best fund manager in the market on merit.
Merit is not easy to judge in fund management as luck or “randomness” plays such a big part in success. And managers can’t run best-of-breed funds in the same category for more than one provider.
Regarding a category such as stable (low equity) funds, for example, the best manager (Foord) already has a mandate with Nedgroup (that is, Nedbank), which pioneered this approach. The second-best has a mandate with Sanlam’s Amplify, which follows the same methodology. Next is Momentum with its Curate range, while PPS also has a best-of-breed offering. Symmetry will be offering just the fifth-best in class.
Cranston, a financial journalist and former trustee of the TML pension fund, is author of ‘The Mavericks’, a history of SA fund management.
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