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Exclusive: Octopus’ advice firm plans from funds to fees

Octopus is stretching its tentacles into the financial advice market with what it hopes to be a disruptive new business. New Model Adviser® has learned brand new details of its plans

Exclusive: Octopus’ advice firm plans from funds to fees

VCT giant Octopus is stretching its tentacles into the financial advice market with what it hopes to be a disruptive new business. Now New Model Adviser® has learned brand new details of its plans from funds to fees, platform and target clients.

It may be a name best known to advisers for operating venture capital trusts (VCT) and now it sells renewable energy too. But as New Model Adviser® revealed at the end of last year, Octopus has been building a vertically integrated advice business, Octopus Wealth.

It claimed its fresh approach could attract people to advice who would otherwise not consider dealing with 'traditional' advice firms.

New Model Adviser® can reveal key details of its business plan, including: 

  • ambitions to train advisers from outside the profession by recruiting people from different backgrounds. 
  • a vertically integrated business model with Octopus providing advice, the platform and fund management;
  • its own white-label platform, which it is currently testing with B2B platform Hubwise. 
  • a long-term ambition to serve the mass market, providing financial planning to people with less than £100,000 to invest.

In recent years a host of online start-ups (such as Nutmeg and co) have launched, hoping to disrupt the world of investing for mass-market consumers. However, Simon Rogerson (pictured below), chief executive of Octopus, told New Model Adviser® ‘robo-advice’ firms will not succeed without offering financial planning as well as online investment.

‘Robo-advice isn’t typically set up to provide financial planning or advice. [Robo-advice] is investment solutions and I don’t think that is the problem people have.’

‘The investment solution must be first-class, but it must have financial planning. We have all got different needs and financial planning done properly makes so much difference to the individual – way more difference than choosing investment A or investment B.’

Rogerson said Octopus wants to develop technology that will speed up advisers’ administration processes, such as fact-finds, compliance material and letters-of-authority, to allow advisers to double the number of clients they can have and  meaning at some point they could have 300 clients per adviser.

The firm will also use Skype, video and telephone advice to speed up the process (as well as providing face-to-face advice for clients who want it).

He said these adviser tech solutions will be used by Octopus’ own advisers as well as being made available to IFAs.

‘We haven’t built these solutions yet but there is defiantly an opportunity when you speak to advisers; one of their big frustrations is the time and effort they spend on administrative tasks because of the tech solutions that are in place today.’

The firm currently has 22 staff, including two advisers, but over the next 14 months it wants to hire around 20 advice staff (including advisers, paraplanners and support staff).


Octopus Wealth’s offering will be restricted, with investments coming through an Octopus multi-manager, who will then invest in a range of third-party active and passive funds from the whole of the market.

Rogerson said Octopus’ own VCT products will form a ‘very small part’ of some clients’ portfolios but each client will use the Octopus Cash product and most will use peer-to-peer lending investment Octopus Choice as a ‘small percentage’ of portfolios. 

The products will sit on a white-label platform, which Octopus is currently testing with Hubwise, but Rogerson said he is also speaking to a couple of the more well-known providers and no final decision has been made yet about the partner.


Upfront fees will be flat and ongoing fees will be a percentage of assets, based on a tiered structure that reduces for wealthier clients.

For example, someone with £500,000 to invest would pay £2,000 up front and then 1.8% a year for financial planning and investment costs. Someone with £1.5 million to invest would pay the same £2,000 up front but would pay a lower annual fee of 1.53%.


Who will the clients be?

Octopus Wealth is targeting mass affluent clients who are new to financial advice and have assets over £250,000. However  Rogerson said further down the line the ambition is to expand its financial planning offering into the mass market.

‘The second element over the long term, through building some of this technology, is it would be great if we can serve the market of people with below £100,000; below the hurdle most advisers see currently. We don’t have those solutions today but, ultimately, over the next five-to-10 years it would be lovely if we could build something to serve those [sub-£100,000] clients.’

This will be face-to-face advice, not robo-advice, Rogerson stressed.

Many IFAs use Octopus for its investment products. Its advice launch will likely raise concerns this is another provider muscling in on advisers’ territory.

Rogerson denied this was the case. He said Octopus Wealth will only target clients who do not already have advisers today.

Any IFA’s clients using Octopus’ products will be ‘off limits’ and he said the firm will in any case not be of the scale to challenge established IFAs in the short term.

‘Yes it is a wealth business, but it will be looking after a couple of hundred customers in 18 months’ time. For this to be seen as a threat, it just will not have the scale,’ he said.

To date the firm only has two advisers, but it is currently looking to recruit more and these new advisers may come from outside the profession and ideally be women who tend to have more empathy and understanding, Rogerson said. It wants to hire five advisers over the next 14 months. 

So far Octopus Wealth has £15 million of assets but it wants this to reach £100 million in 18 months’ time and expand quickly beyond that.

The firm is planning on partnering with a number of other big-name brands, such as travel companies, to offer rewards for clients and try and get more new customers.

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