Platforms Tag

Nucleus has finally confirmed what we’d suspected for sometime: it’s going to float on the London Stock Exchange’s AIM market. Transact was the first to take the plunge on 2nd March and in the same month AJ Bell announced that it was preparing a flotation in late 2018/early 2019. Nucleus’s announcement came on 2nd July, but it’s working to a punchy calendar and plans to have the whole thing tied up by late July, which is pretty fast by anyone’s book. 

After almost two decades of the market being dominated by three or four technology providers, there are several new platform technologies emerging. There’s been a lot of noise about Hubwise and Embark, but Seccl will soon be out there drumming up business too. All of them have the potential to disrupt the platform market. Their competitive advantage lies in the fact that they provide pared down, focused propositions that have none of the legacy technology and inefficiencies in existing technologies.

ISA activity was less pronounced in the third quarter of 2017, with sales dropping to £1.5bn. However, pensions picked up the slack and generated around 70% of platforms’ net flows. This was due to a combination of investors exercising their pension freedom rights and the steady pipeline of DB transfers.

Last year, the Gatekeepers report caused a stir in the industry by being the first to shine a light on potential biases in fund ratings. This year’s edition is bigger, better and bolder with a wealth of practical information to help fund managers navigate this challenging post MS15/2.3 market. As well as re-assessing the gatekeeper market, we’ve taken a closer look at the efficacy of active fund management, sorted the really active wheat from the closet-tracking chaff, and looked at the value chain from a regulatory perspective and the potential for further scrutiny and investigation.

...and hope springs eternal

We ran the spring sentiment survey in the last week of April (we waited until after the first round of the French presidential election on 23rd April) until mid May. In all, there were 84 responses. Fund groups represented 62%, platforms 25% and distributors 13%. The audience was mainly British (77% ) and the rest cross-border.

We're in an extended lockdown phase as several platform clients will not be reporting their results to the stock exchange until March. That's a pretty long wait so here are a few investment platform industry highlights to keep you going until the Fundscape Platform Report is issued. 

The Trump effect
  • We ran the sentiment survey in the second and third week of January. By this point, Trump’s shock election as president of the US was beginning to sink in, but he had yet to take office. The run-up to his inauguration and cabinet/adviser appointments were front-page news.
  • In all, we there were 82 responses to the survey. Fund groups represented 67%, platforms 31% and distributors 2%.
  • The audience was mainly British with 78% of respondents defining themselves as UK-based and the rest cross-border or international.
  • Interestingly, there was a significant dichotomy between the positive expectations for 2017 (answers to the multiple choice questions) and the pessimistic concerns voiced in the open questions.
  • Overwhelmingly, the geopolitical environment and specifically Brexit, Trump and forthcoming elections in Europe were the main concern.
  • At the time of writing, the fixed income rotation into equity was in full swing and stock-market indices had hit all-time highs.

Each year we provide five-year platform projections and look at the main drivers of growth and change, and their significance for different stakeholders. KEY TRENDS The world is literally changing before our eyes. The nationalistic mood sweeping through global politics is re-setting government policy globally and there is a similar mindset shift sweeping through financial services. Whether fund managers and platforms like it or not, in this low-growth world the old way of doing business is no longer viable or sustainable and investors are no longer willing to subsidise it.  That means increased focus on the cost of investment solutions and their component parts (advisers, platforms, fund managers...).

There was a visceral reaction to the Brexit vote in July. Respondents were negative... but much more positive about the second half of the year.

So after months of speculation, Aegon finally announced that it is acquiring the Cofunds platform for £140m. The mood at Witham is understandably elated, much to L&G’s amazement. To be blunt though, when you’ve hit rock bottom the only way is up.  The team is ecstatic to be joining a parent that actually wants to be a major player in the platform game and hopes the days of operating on a shoestring are finally over.

So Standard Life is buying Axa's Elevate platform. Howe exciting! All we need now is for Aegon to confirm that it's buying Cofunds and that will be industry consolidation sorted for a little while. A tie-up between the two makes sense. Standard Life has big ambitions and the Axa group had made clear that it wanted out. It makes sense for Elevate to move to a parent that wants it and has a long-term stake in the industry.