After months of speculation, Aegon has purchased Cofunds from Legal & General for £140m. This has resulted in the insurer adding £77.5bn of assets under administration to the £9m it already holds – to be completed subject to regulation in the fourth quarter of 2016.
Matthew Bird, independent financial planner at Newport-based Seer Green, said although this purchase should be positive for customers, issues surrounding costs could still arise, “The charging structures between platforms are different and when the inevitable consolidation occurs, certain clients may face increased charges.”
Aegon has been determined to focus on its platform recently after shedding other parts of its business. In April, two-thirds of its annuity business was sold to Rothesay Life for £6bn, and in July the remaining annuity writing obligations were sold on to L&G.
Mark Till, chief distribution and marketing officer at Aegon, said although there are no immediate plans to change the brand, intermediaries that use the platform will upgrade to an enhanced version.
Once the platform has been fully integrated, Cofunds customers (including those who use the platform through a white labelled version) will have access to a much wider range of investment options and will be able to invest in assets including exchange-traded funds, investment trusts and FTSE 350 stocks.
Mr Bird felt that although it is positive to gain access to these asset classes, advisers should remain cautious about using them due to transactional broker fees being added to existing costs.
“This makes them unsuitable for use in model portfolios – especially for clients who are making regular small contributions or drawing a monthly income, as these transaction costs will mount up.”
Cofunds also has its self-invested personal pension that will continue to be administered by Suffolk Life, which was also sold from L&G to Curtis Banks earlier this year.
craig.rickman@ft.com
