Standard Life’s deal to buy Axa Elevate marks the first significant sign of consolidation in the adviser platform space.
Predictions of this kind of move have become commonplace since the shift to unbundled pricing in 2013, but at times it’s felt like waiting for Godot, the eponymous character in the Samuel Beckett play who never actually arrives.
Advisers now facing suitability questions, and potential price changes may not exactly be relieved that merger and acquisition activity has finally put in an appearance.
Elevate users were at least given initial clarity over the status of their ability to access cut-price funds from Architas, Axa’s multi-manager business. These deals are also being extended to users of the Standard Life Wrap platform.
But I expect I’m not alone in wondering whether Architas may nonetheless prove to be the big loser from this process.
Can Architas hope to compete with MyFolio on Standard Life’s own platform?To be fair, it should be noted the company’s prospects elsewhere look pretty healthy.
Earlier this year Axa announced Architas would become the “hub” for all the insurer’s multi-manager business across Europe.
This means a sizeable increase in assets – certainly more than enough to leave the company in a position of strength this year whatever happens.
That’s Europe, but what about the UK? One big problem for the business is that it’s now going to be competing with Standard Life’s MyFolio range, which will be similarly discounted for users of the wrap platform.
Even with its deals still in place, can Architas hope to compete with the Edinburgh firm’s own multi-asset proposition on its own platform?
If anything, the risks are in the opposite direction – that MyFolio will begin to attract Elevate users away from Architas’s funds.
As with most such arrangements, Axa doesn’t disclose how much of its multi-manager assets come from its own platform users, but the proportion must be material.
Without a structural advantage, Architas now finds itself left to compete among all the other fund of funds providers for adviser money in the UK.
JPMorgan Asset Management’s exit from the space in March underlines how difficult this can be if you’re not one of the big three – Schroders, Jupiter and BMO – or don’t have a reliable source of internal flows.
I wonder if Architas chief investment officer Caspar Rock was thinking about that dynamic when he decided to leave the firm for Cazenove last month.
Either way, his old business may now find it easier to look to Europe for further expansion rather than wait in vain domestically.
Dan Jones is editor of Investment Adviser
