In the first part of our end of year reviews, Jack Gilbert looks back on how platforms fared in 2018, turning his eye towards flotations, technology problems and Charles Dickens.
This year was something a Tale of Two Cities for investment platforms.
For many it was the best of times. In March, Transact achieved its long-term ambition of floating on the stock market. This move was well received by investors with the wrap’s market capitalisation rising from £650 million to more than £1 billion.
The first-of-its-kind initial public offering demonstrated how valuable advice platforms could be, and was followed in July by a (slightly less fruitful) flotation from Nucleus. AJ Bell also became a publicly listed company in December.
In July, the Financial Conduct Authority (FCA) platform market study gave the sector a ‘clean bill of health’, as one platform bigwig described it to me recently. It only really found fault with direct-to-consumer platforms and in particular their egregious exit fees.
Aviva and Aegon's angst
But for many other players, 2018 truly was the worst of times.
Aviva kicked off the year by replatforming to FNZ technology. It seemed to have gone smoothly for a day or so, before chaos ensued for IFAs up and down the country. Problems ranged from no client income payments to false 10% portfolio drop notifications and just about everything in between.
When Aegon moved 400,000 Cofunds clients onto a new platform in May, it was also greeted by consternation from advisers who were faced with never-ending call-centre waits to speak to someone to help with their issues.
Both migrations demonstrate when replatforming projects go wrong, they do so spectacularly. No matter how big and powerful platform providers are, they can become powerless in the face of data and tech problems.
Speaking to New Model Adviser® in July, the FCA’s then director of competition, Mary Starks, admitted there was a concentration risk in the small number of third-party technology firms sitting behind many of the biggest platform names. She said it was an ‘issue’ and ‘it is definitely on the FCA’s radar’.