Platform challenger sets £20bn two year target

Embark chief executive Phil Smith has set an ambitious target for the platform and Sipp provider of reaching £20 billion in assets under administration before it floats in 2020.

More than five years since Embark launched as a combined Sipp and platform business, it now plans to expand dramatically. It is aiming to reach more than £20 billion in size before a potential initial public offering (IPO) in 2020, according to group chief executive Phil Smith (pictured).

Embark currently has £11.5 billion in assets under administration. Smith has put in place partnerships to provide a Sipp wrapper to robo-advisers including Nutmeg, providing pensions services for banks and to expand into the workplace savings market.

More than five years since Embark launched as a combined Sipp and platform business, it now plans to expand dramatically. It is aiming to reach more than £20 billion in size before a potential initial public offering (IPO) in 2020, according to group chief executive Phil Smith (pictured).

Embark currently has £11.5 billion in assets under administration. Smith has put in place partnerships to provide a Sipp wrapper to robo-advisers including Nutmeg, providing pensions services for banks and to expand into the workplace savings market.

You said previously you want to list the business. Is this still the plan?

A big part of the potential for us to list the business, which is not an absolute thing, is how we provide the longer range funding to do things like tackle the workplace market more aggressively. If we list, we are listing for capital to grow, not to take money off the table.

Our mandate is to look to IPO the company sometime towards the early part of 2020. It might be a little earlier or a bit later but we will only do it if circumstances are right.

Over the next pre-IPO period, there is a chance we will double in scale for the group. I would want to double in scale by the IPO.

The Sipp market has taken a battering recently, with claims over unregulated investments. Are you concerned about some of the books you have acquired?

There is a feeling of victimisation in the Sipp and SSAS world. This sector is vulnerable to ambulance chasers and is getting bitten.
A lot of people did stuff quite loosely and they are getting kicked in the arse for it. It is under a bit of near-term threat, but it is important for the Sipp market to survive.

We are relaxed [about our own position] because our strategy has been to de-risk the back book. We bought Hornbuckle Mitchell in 2013 and the market view was it was loaded with toxic assets, but in reality it was not.

It had things that were not right and we stripped those out and stopped writing business with IFAs that were not operating appropriate processes. And then we have been pushing books we did not like outward.

Is Hornbuckle open for business?

We are not actively marketing Hornbuckle but we are not closed for new business. We are actively marketing Rowanmoor [which it acquired in 2016] for our bespoke Sipp. Hornbuckle and EBS Pensions are very active in the white-label space.

Embark acquired collapsed Sipp and platform Avalon in 2016. What has happened to that?

The majority of Avalon has moved to our wrap assets. There were some Sipps in there, which were part of a segregated contract through a company called Quai Administration Services, so we sold that book to Greyfriars Asset Management in late 2016.

The assets were vanilla but we did not want to work with Quai. So as a consequence we gratefully sold them to Greyfriars.

Last year you launched a wrap platform on FNZ. What is the strategy here?

We want to be a mainstream mass affluent provider. We are not trying to be a high-net-worth provider, which is what the majority of the wrap market is trying to do.

We are disruptive and we are trying to reduce aggregate pricing so consumers can access financial advice. From a starting engine, you can buy an ISA at 15 basis points (bps) and the Sipp is 7.5 bps.

Who is your hero?

The musician Vince Clarke (Depeche Mode, Yazoo, Erasure) as he is creative, commercial and has the courage of his convictions.

If you weren’t doing this job, what would you be doing?

Being a poor session musician, a synth player to be precise.

What is your pet peeve?

People who talk but don’t do, particularly when it’s pure laziness getting in the way.

What is your favourite album?

Raintown by Deacon Blue.

Who is your ideal dinner party guest?

Billy Connolly for the stories.

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