The former head of Cofunds has warned that transferring platform assets onto a new technology provider is fraught with difficulty, and said Aegon is likely to stumble on data and functionality “gaps” which it will have to plug.
Aegon told FTAdviser it would be moving Cofunds onto its own technology system GBST, and promised the transition would be smooth for advisers.
Clive Boothman, who was chief executive of Cofunds between 2002 and 2003, heralded this announcement as a “good move” from Aegon, but warned they might come across problems when the mass of data is moved.
“Even before you start transferring across, you’ve always got data integrity issues,” he said, adding that while everything may be regulated and legal, it might be necessary to do a big data “clean-up”.
This, he said, could come down to ensuring clients don’t have two accounts or advisers’ names are spelt correctly.
“You could say that is just part of the platform’s housekeeping regardless of whether you are switching to a different technology provider, but you don’t want to migrate issues from one system onto another.”
Mr Boothman, who founded wrap platform Ascentric in 2005 and was chairman up until 2014, said he was not decrying Aegon’s ability to integrate Cofunds in due course, but said it was not going to be a simple job.
By a matter of logic there will be gaps between the different technology providers, which is always a challenge Clive BoothmanHe also said there are always going to be functionality issues with these kinds of mergers, particularly as advisers use the platform technology to shape their business.
“When you switch to another system with it’s own ‘nice-to-haves’, you might have to turn-off certain functionalities which were available on the old system.
“By a matter of logic there will be gaps between the different technology providers, which is always a challenge, and no doubt Aegon will be working through everything to minimise the gaps.”
Commenting on the change of ownership, Mr Boothman said it begs the question why Legal & General bought the platform, only to sell it three years later, which he guessed could be largely down to the cost of re-platforming Cofunds.
“Aegon could be a good parent, but it depends what they do with Cofunds.”
Mr Boothman said, in the early days of platforms 15 years ago, people used to get very worried about parentage and whether the owners of a platform could influence what was available on the platform, as well as its independence.
“Those conversations don’t happen anymore, and now people just look at functionality and its ability to support their business,” he said.
This is in stark contrast to other platform players, some of which suggested Cofunds’ outflows in the first half of the year could be linked to the uncertainty over its ownership.
“I think it’s a question of how Aegon embraces Cofunds and ensures it supports what clients want the platform to do.”
Mr Boothman, who recently joined Platform One as chairman and is now a non-executive director of Fund Partners, pointed out most platforms are currently wrestling with technology and are undergoing a second or third round technology transfer, with some either developing the systems they already have or moving onto new ones.
“Platforms should have small margins, a big IT team, and a small admin team that don’t have to keep fixing things; that’s the dream anyway.”
But he said that has proved quite difficult for most platforms to deliver, which he blamed on the constantly evolving demands of the industry.
Adviser view
Tony Larkins, managing director of Cambridgeshire-based Beacon Wealth Management, said: “I would think there will be difficulties with transferring assets. If you are going to take on a client bank of any sort there will always be problems.
“We have some assets with Cofunds but not a lot, just over £1m. While they are not our platform of choice we have to justify any change would be best for the client and until we see something different we cannot do that.”
katherine.denham@ft.com
