Elevate platform: New Isa allowance will boost assets

The managing director of the Elevate platform said predictions about a post-Budget acceleration of inflows are starting to be realised, with the company “ready” for a further boost when the new Isa allowance is introduced in July.

Mr Thompson said the company’s “enhanced service” and “competitive pricing structure” is hitting the mark with advisers and clients. He added: “That is why we remain firmly on track to meet our targets and are moving closer to profitability.”

However, industry commentators such as Ned Cazalet, founder of Cazalet Consulting, have warned that life companies such as Axa and Standard Life – who have poured “vast sums” into their platform businesses – will have to “beat a hasty retreat” from this market if they cannot achieve sustainable margins.

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In the 625-page report, Life and Pensions 2014, Mr Cazalet highlighted a major disparity between the budgets of the big players and smaller independent platforms.

He pointed out that Axa and Standard Life share capital 10 times the size of Nucleus, Ascentric and Transact yet share similar assets under management (AUM).

At the time the report was released in February, the two giants had £19.7bn of AUM, while the three smaller platforms had £21.7bn AUM.

Mr Thompson confirmed that £10m was invested into Elevate last year. During the first quarter of this year, AUM rose by 30 per cent to £544, partly fuelled by a 34 per cent increase in Isa sales.

Elevate also recently cut its blanket 0.28 price point for funds worth over £1m. Investors with portfolios worth between £1m and £2.5m pay 25 basis points (bps), falling to 15bps for funds between £2.5m and £5m and 10bps for amounts over £5m.

Adviser view

Rob Simpson, director of Warwickshire-based Simpson Financial Services, said: “The Budget changes to income drawdown were surely not factored into the business plans of platforms, so they have that tricky issue ahead. The reason why Axa has got into this field is that it has seen outflows from life offices to the likes of Transact and all the big providers now want to have go. Axa and others have deep pockets but only a certain number who can reach a sufficient level of AUM can survive. If they all hit their targets, that would exceed the total assets available from the public.”

Profits and losses of selected platforms in 2012

Source: Cazalet Consulting

PlatformAssets (£bn)Share capital (£m)P&L (£m)Net equity (£m)
Axa Portfolio Services5.3132.3-9636.3
Standard Life14.4154-187.166.9