The Big Interview: David Montgomery, MD of M&G Wealth

David “Monty” Montgomery is the managing director of M&G Wealth, and he relocated from the US to his native Scotland to form the division of M&G plc.

Prior senior roles on his CV include serving as Aegon’s business transformation programme director, and Virgin Money’s head of delivery.

M&G Wealth has come about and grown via the acquisition of the Ascentric investment platform business, and it is harnessing digitally led enhancements and specialist partnerships with the likes of digital investment specialist Moneyfarm.

When M&G announced the latter tie-up in January, it said direct investing in the UK has seen rapid growth in the last five years, with an average annual increase in assets under management of 18 per cent to total £351 billion at the end of June 2021.

Mr Montgomery said at the time: “With the launch of a direct, mobile-based investment platform, complementing our growing independent, proprietary and hybrid adviser businesses, our customers will be able to access the channel, advice and investment proposition that most suits their financial situation and needs.”

M&G Wealth last year unveiled a new advice service provided by humans but “underpinned by digital technology”, having appointed Australia-based Ignition Advice to develop the “low-cost hybrid digital advice offering”.

Mr Montgomery says he is keen to address a financial advice gap throughout Scotland and the rest of the UK – making investment choices and experiences accessible for everyone, no matter their circumstances.

You have returned from working in Colorado. Was it a difficult decision to come back to Scotland?

'We have done a lot in 18 months... so it shows what is possible,' says the finance boss. Picture: Graham Flack.

I was into American sports and had always wanted to experience the States. I was offered a job that led to the family moving out there for four years. M&G said that if I was ever thinking of returning to Scotland there may be a role for me and we got talking about the wealth management business.

Colorado is a fantastic place, particularly for anyone who likes the outdoor life. It was a difficult decision to leave, but I was travelling a lot, and that part was not difficult to leave behind. We have family in Scotland that we did not get to see and we were thinking about the kids’ education.

On your return you set up M&G Wealth. Can you explain the structure of the business?

We have come a long way in the 18 months since we set it up. We have gone very fast in terms of identifying the capabilities of a wealth business. Some we already had and some we have acquired or partnered with if we could not build it ourselves.

Mr Montgomery notes that the firm has an office in Edinburgh, with another opening in Stirling in the summer. Picture: Graham Flack.

We have very much looked at whether it is quicker to build or buy. But it wasn’t just a case of the quickest way being to buy something. It is whether buying gives us the capability that is better than what we can build ourselves. In many cases other firms have developed the experience that we can learn from.

You’ve spoken about plugging the advice gap. How do you define it and how have you responded?

There are people who are seeking advice but cannot get it, either because it’s not easily available, or the right sort of advice, or it is too expensive. Some would benefit from advice but just can’t get it, so there is number of things we have been doing. We launched an Academy to bring the next wave of advisers into the market.

We have a hybrid advice capability we launched last year, which is about making advice more efficient. By reducing the cost, we can provide advice to more people.

There are also more people accessing digital solutions and trying to do it themselves and the partnership with Moneyfarm provides an opportunity to help them. Our wealth business philosophy is that we want to provide services that help advisers grow their business and to help customers.

You’ve said there is a critical shortage of independent financial advisors. Is the Academy helping solve that problem?

We think there is a need for more advisers. We have seen a diverse group coming into the Academy and we have encouraged that. I think it is a good and valued profession to be in. One of the stresses that people have in their lives is their financial situation and if you think about the whole wellbeing dynamic and being able to help people with that, then advice is a key component of dealing with it.

The Academy is going well. We are up to two waves with 12 to 14 people in each one. We are looking to three or four waves each year. It is a proper process with exams.

You acquired Ascentric from Royal London in September 2020. How does that fit into the structure?

It’s an investing platform business that provides custodian capability for advisers so they can manage people’s money through self-invested personal pensions, ISAs and other products. We look after about £17bn for customers.

We also have our own investments capability and we appointed Shanti Kelemen chief investment officer at the end of last year to build out our portfolio services so that we can package up our investment solutions and make those available, either on our platform or other people’s platforms.

These are the three parts of our business: advice, platform and investments.

The business is focused significantly around Scotland. How do you see that developing?

We have an office in Edinburgh and we are moving staff to new offices in Stirling, which are due to open in the summer. Scotland is just an interesting place for financial services with lots of heritage and universities that help provide a talent base. The fintech scene is really strong, which is supported by the universities and lots of start-ups.

How has the hybrid working model worked for M&G?

We have proved it works well and we want to give people choice. There are benefits from social interaction and working through things as a group. But if people can do things remotely and it suits their situation then we are going to provide that flexibility.

We have not seen any disruption. We have acquired businesses and integrated them. We have done a lot in 18 months and practically all of it during lockdowns, so it shows what is possible. When people put their minds to it they find ways through. It drives innovation forward and changes the market.

If you look at our hybrid capability, moving on to digital and video advice, it happened overnight. We just had to do it. We had the tech to do it. It just accelerated some of that. It was an opportunity to embrace some of the things that were going to take place anyway.

The nature of investment has changed as customers have become more knowledgeable, digitally capable, and even more sceptical. How does this affect the way you operate?

There is more information out there but sometimes people are getting their advice, if you can call it advice, from TikTok or Instagram. How reliable is that? There are things we have to look at as an industry. Does the information people are getting provide what they need? Is it good advice and guidance?

That’s why I think there is always going to be a role for professional advice on investments and retirement planning.

But if people do want to do more DIY investing then we have things like our partnership with Moneyfarm and we want to provide that advice in the right way with the best tools and services.

There is volatility in the market and things do change, which is why we have a broad set of investment solutions. Our new range is a very sustainable environmental, social and governance-focused portfolio. We know people want more sustainability in their models.

The advisers are trying to build a relationship with the customer and we can then provide the products and services to meet their needs.

You’ve touched on social media there. How will that play a part in your operations?

Speaking as a parent, I think it will play a bigger part in terms of where people source information.

Influencers will talk about products and services. It is for us an industry to decide how much we embrace it or how much we are concerned about it. It comes back to making sure there is a good, solid advice profession that is there when people need it.

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