Wrap platform Nucleus has hit £10bn in assets under administration, as its founder forecasted a wave of change in the platform market.
According to full-year figures for 2015, the adviser users and a pre-tax profit amounted to £4.8m from against 2014’s figure of £2.5m, marking a decade of steady growth for the wrap platform since it launched in 2006.
Its assets under administration have jumped to £10bn in 18 months, after it reported hitting the £8bn barrier in 2014.
Chief executive David Ferguson said the platform has navigated its way through major regulatory changes and he anticipates further challenges in the future as consumer demands evolve.
“A huge change is afoot in the platform market, whether due to re-platforming or as shareholders disposed of failing operations.”
He said completing the platform’s technology upgrade to its existing provider’s new software means the wrap is ready to take on more opportunities in the future.
Alex Reynolds, a financial adviser with London-based Advies Private Clients, said: “There are clearly too many platforms in the market place at the moment and I think that those that will prosper will be those that adapt quickly and embrace technology.
“Many advisers are looking at their platforms to ensure it can keep servicing a large number of clients through use of model and bespoke portfolios, and it will be the platforms that make this easiest who will survive.”
Mr Reynolds pointed out that many platforms struggle to implement changes or upgrade when necessary due to the large costs involved.
“I believe the market will shrink to 10 to 15 platforms in the next few years, but I am surprised there are still so many because - based on their assets under management - I can’t imagine many are profitable.”
This has clearly not been a financially comfortable route for Nucleus. John StirlingJohn Stirling, chartered financial planner and director at Walden Capital, said: “It appears that success in the platform market relies on staying power, which can come one of two routes: either making money very early on, or having deep corporate pockets.”
He said platforms are far more price conscious now compared to 10 years ago, adding making money on less than £10bn is a “tricky proposition”.
“Nucleus have come a different route, neither corporate, nor quickly profitable - with backing from their users.
“While this has clearly not been a financially comfortable route, it has ensured the direction of development has been what its users need.”
Mr Stirling added ‘independent’ wraps will probably end up as the long term winners. “Although I don’t see FundsNetwork or the Standard Life wrap disappearing any time soon.”
katherine.denham@ft.com
