Speculation was rife last month over a £600m acquisition, with reports that the deal had been turned down but had been followed by a £650m bid.
Bridgepoint, which owned Quilter, and Old Mutual had refused to comment on the speculation, but have today revealed they have agreed a deal worth £585 million.
Quilter Cheviot, a discretionary investment management business, has £16bn funds under management and 165 investment managers.
Its distribution model includes financial advisers and clients that come directly to its investment managers.

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Paul Feeney, chief executive of Old Mutual Wealth, said: "This is a key acquisition.
"Discretionary investment management was a clear gap in our proposition and the addition of Quilter Cheviot closes that gap.
"This acquisition is a major step towards our vision of becoming the UK's leading investment business, with a proposition we can export to our international markets over time."
Customers investing via the current Old Mutual Wealth platform typically hold between £50,000 and £250,000, whereas the average investment via Quilter Cheviot's bespoke discretionary investment service is in the region of £500,000.
Quilter Cheviot's clients will benefit from improved buying power of the combined group, Old Mutual said.
Martin Baines, chief executive of Quilter Cheviot, said: "This is an exciting development for our business, our clients and our intermediary partners as we become part of Old Mutual Wealth, where our services will be complementary to the existing offering.
"Old Mutual Wealth has a very strong distribution network through which we will be able to promote our discretionary investment management services and we will get greater access to the market leading asset management capability within Old Mutual Global Investors.
"The long term parentage and financial security that the acquisition provides will allow us to continue to do what we do best, manage clients' money on a bespoke discretionary basis, providing high levels of service to both clients and intermediaries without compromise."
Martin Baines, chief executive of Quilter Cheviot, will remain in his role and will join the Old Mutual Wealth executive committee, reporting to Paul Feeney, chief executive of Old Mutual Wealth.
The acquisition is subject to regulatory approval.
Following approval from regulators, Quilter Cheviot will become the discretionary investment management business within Old Mutual Wealth.