A key part of our service is the management of the different products in which our clients invest. Striking the right balance between ISAs, general investments, pensions and investment bonds can make a big difference to the tax paid and ultimately the returns of a portfolio.
To support our approach, we tend to recommend flexible product providers, known as investment platforms. These are effectively technology solutions that facilitate our product and fund recommendations.
Every year we review our preferred platforms and assess whether they remain suitable for our clients. Our panel of providers has remained fairly static for many years, with Nucleus and Seven Investment Management (7IM) continuing to feature and used by the majority of our clients. However, this year’s (2022) review has thrown up some interesting issues and potential opportunities that could see a change in the status quo over the coming years.
Changes at Nucleus
It’s fair to say that the last couple of years have been pretty significant for Nucleus. The firm was bought by pension provider James Hay in August 2021, with both firms being rebranded under the Nucleus name. The deal was backed by private equity firm Epiris, although this has since been restructured with an American firm, HPS Investment Partners, now the majority shareholder.
The founder and CEO of Nucleus, David Ferguson, left in September 2021, followed by a few other board members and key senior people. The team has now stabilised and service has remained pretty good throughout this period. However, the key challenge facing Nucleus over the next few years is switching the provider of their technology from Australian firm, Bravura, to market leader, FNZ (a firm that James Hay was already switching to prior to their original purchase of Nucleus).
This ‘re-platforming’ is often a very difficult process and is something we will be keeping a close eye on. The new platform will initially launch with the old James Hay part of the business in 2023 and subsequently, Nucleus is expected to switch over at some point in 2025. Although this creates an element of uncertainty, we remain happy to continue recommending Nucleus to new and existing Equilibrium clients. This is primarily on the basis that we believe the Nucleus platform is currently unrivalled in the quality of its platform technology and product range. Our research indicates that switching somewhere else at present would most likely be a backward step.
That’s not to say our view on this won’t change over the next year or so. There are a number of interesting new entrants to the platform marketplace, who can develop their technology and processes very quickly while being unencumbered by legacy systems.
A good example of this is a firm called Seccl, where the CEO is now none other than ex-Nucleus CEO, David Ferguson. Seccl is a firm that has developed from the Fintech space and which allows firms like Equilibrium to create their own investment platform.
Using this technology, we could offer our own platform service to clients and be completely in charge of pricing and development. However, some key features are currently missing from their offering although these are likely to be addressed over the next year. It could be a great option for our clients, but only when the service has matured to rival that which can be found elsewhere.
Interestingly, we have a close relationship with IFSL (the authorised corporate director (ACD) of the Equilibrium funds). IFSL have created and recently launched a platform using Seccl technology and we are watching with interest to see how this develops and perhaps even whether it might be a good option for some of our clients.
To sum up, we are not adjusting the investment platforms we recommend at this time. That said, we will be closely watching the platform marketplace and undertaking increased levels of research due to the coming technology shift at Nucleus and the likely increased pace of change in the industry as a whole.
This blog is intended as an informative piece and does not construe advice. If you have any further questions, please don’t hesitate to get in touch with us on 0808 156 1176 or by reaching out to your usual Equilibrium contact.