When I was four, my dad bought my mum a camcorder for her birthday. He told me about it and explained what keeping a secret was. I passed her the present and said, “Happy birthday. Camcorder.” My family have never let me live this down and I still find it difficult to keep a secret. So I’m glad that one of the worst kept secrets in the industry is out and I can freely discuss and comment on it.
Aegon has officially bought Cofunds from Legal & General in a move that means combined assets will reach £87.7bn. While Cofunds has not exactly been flavour of the month for many advisers, it is set to be a great deal and one that many investors will be able to reap the benefits from. Myself included. For ethical reasons, I should probably state now that my Isa is kept on Cofunds through a white-labelled version.
The best news to come out of it, in my opinion, is that investment trusts will finally be available to me – I mean Cofunds investors. This is a very long time coming and various reasons have been spouted out over the years as to why platforms can’t hold investment trusts – liquidity, discounts, charges, blah blah blah. But we aren’t in ancient times – it’s 2016 and technology has advanced so far in the past 10 years that there really should be no reason for platforms not to offer them. I should probably add ETFs will be available too, but any type of passive fund personally isn’t my cup of tea and this is my column so I can write about what I want.
I have a soft spot for investment trusts. I like the way they are run, every investment trust manager I’ve met has been nice (while it may sound shallow, this does help) and the space is very old school. I like what they do and, more importantly, I want the returns you see from them compared with their unit trust counterparts.
But we all know the biggest reason for Cofunds (along with many other platforms – see our platform survey last month for more on that) not offering investment trusts has nothing to do with liquidity and everything to do with technology.
So while the deal may initially be good for Cofunds users, advisers will need Aegon to dig deep and properly invest in the platform. There’s no point in spending the initial money if you aren’t then going to do anything with it.
Cofunds has always seemed like the middle child (I’m allowed to say that because I am one) of the industry. There are many issues with it and no one wanted to deal with it. Unfortunately that included L&G, which did not give Cofunds the investment it needed to truly develop into something huge – a direct to consumer, retail and institutional platform.
Why is it that companies are reluctant to invest in technology? And this goes for more than just platforms.
Provided the right investment is made to better the platform, this deal could really be excellent for advisers. For a start, it will allow a more integrated pension provision – Cofunds even has its own Sipp, which will still be administered by Suffolk Life, despite both groups being sold off from L&G this year.
Another key point in this acquisition will be keeping in touch with customers. There are many people out there who do not like what Aegon has to offer, so it will be interesting to see flows in and out of both platforms in the coming months. Cofunds is a much larger and wider used platform than Aegon and both will have to do everything they can to keep clients on side. Re-platforming and updating software (while keeping costs down) is what will need to be done immediately. Advisers need ease, not slow and complicated platforms. It has to remain easy for consumers to use too.
Need we be reminded that technology is not just the future, but (as cringeworthy as it sounds) “the now”? For the combined platforms to be a true success and achieve everything they are able to, continuing investment in technology is a necessity. Technology is nothing to be afraid of and makes our lives much easier. Sure, we probably talk to and interact with each other less, but that suits me fine. Fewer secrets to keep.
