A number of platforms have seen money coming in from Cofunds over recent months, blaming the fund supermarket’s spike in outflows on ambiguity over its future leading up to last week’s takeover.
According to Legal & General, which reached a deal with Aegon UK to sell Cofunds for £140m on 11 August, the platform suffered outflows totalling £700m in the first six months of 2016, after reporting £1.1bn inflows in the previous year.
The insurance giant blamed the loss on customers withdrawing money for income and “other purposes”.
One of the larger platforms, which wanted to remain anonymous, confirmed that transfers from Cofunds onto its platform were the same in the first half of this year as they were for the whole of 2015.
Barry Neilson, business development director at Nucleus, said the large fund supermarkets were where he saw the bulk of money transfers coming from, with Cofunds often topping the list of companies feeding into Nucleus’s flows.
He did point out it was almost expected that most of the cash would come from Cofunds, bearing in mind it is the largest platform in the UK.
Mr Neilson said this was down to a systematic market shift, causing a switch away from old-style fund supermarkets.
He said newer platforms such as Nucleus had accumulated assets and adviser relationships more quickly, “probably because they work on more modern technology, are able to deal with a wider range of asset types, and have a broader range of functionality and tax wrappers”.
He added Cofunds’ corporate position had been “unstable”.
“If advisers do deeper due diligence on their platforms, there will be a stronger focus on sustainability.”
Mr Neilson said the sunset clause – which effectively shut off trail commission on platforms – was another reason advisers might turn their back on larger players like Cofunds.
Bill Vasilieff, chief executive of Novia Financial, said he had seen money come from Cofunds recently, but not as much as from other platforms, such as Old Mutual and Axa Elevate.
He added: “With Cofunds, we often hear the platform is behind the times. With others, the biggest complaint I’ve heard is concern about the creation of a restricted sales force. Aegon has a challenge on its hands and will have to manage the change carefully or it will lose money.”
Mark Till, chief distribution and marketing officer at Aegon, said the company will establish an advisory board to take on advisers’ feedback.
Jonathan Gunby, chief development officer at Transact, said he had not seen a spike in inflows from Cofunds, but he did note that any corporate change tends to create uncertainty.
Alistair Wilson, head of Zurich’s retail platform strategy, said in the second quarter of this year that around 30 per cent of new money flowing into the Zurich platform came from other investment platforms but he could not be specific about which platforms these were.
He added: “There is old technology being used that isn’t delivering in the 21st century.”
According to CoreData Research, the main platforms used by advisers are Transact, Old Mutual, Standard Life and FundsNetwork.
Gary Nettleingham, financial adviser at Catalpa Financial Planning, said: “I don’t believe the outflows are that significant. However, those who have pulled away seem to be as concerned about service standards as they are about the commitment of the parent – I would wager these are two sides of the same coin.”
Blair Cann, senior partner and adviser for Hertforshire-based M Thurlow & Co, said: “I am not sure why uncertainty over platform ownership should have any significance to those using it.”
He said the main factors were suitability, cost and service.
A spokeswoman for Cofunds said the platform wrote more than £4bn in new business from intermediaries last year. She added: “Our clients tell us they’re pleased we are going to be at the centre of Aegon’s platform strategy with a commitment for future development.”
katherine.denham@ft.com
