Old Mutual’s decision to drop the technology company that powered its platform could prompt advisers to think about shifting client assets to different providers later down the line, industry experts have said.
Earlier this month, Old Mutual shocked the industry by announcing it was terminating its contract with IFDS, deciding to use technology supplier FNZ instead.
The head of Old Mutual Wealth, Paul Feeney, told FTAdviser it would have cost too much time and money to upgrade the platform technology if they had stayed with their original IT provider.
Industry figures have disputed whether the announcement will trigger a big shift away from the Old Mutual platform, but they expect advisers to review their platform providers when there is greater clarity around the changes taking place.
Bill Vasilieff, chief executive of Novia, questioned whether Old Mutual will be able to make the huge cost cuts they have outlined by opting for FNZ.
"This project is more complex than just building a new platform; it is a substantial migration involved and I'll be interested in seeing whether they end up paying £160m."
He also claimed this recent announcement just adds to advisers' existing concerns about changes at Old Mutual, such as the firm setting up a restricted sales force and the overarching group's radical restructure as it splits into four parts.
"I think it's a mixed bag in terms of when advisers shift money around; a lot of advisers will wait and see how it pans out, but some are already unsettled."
Mike Hogg, head of proposition for Standard Life's Wrap platform, said it was too early to say whether it would see a material shift in business.
But he said he had seen evidence of advice firms questioning their long-term choice of platform partners in light of uncertainty about a number of providers, adding: "There are few examples of successful re-platforming at scale and a high potential for disruption to client service in the process.
“This uncertainty means conversations with firms are opening up that might have historically been closed."
Despite Old Mutual consistently being among the largest cede companies of transfers onto Nucleus, Barry Neilson, head of business development at advised platform Nucleus, said his company hasn’t seen an increase of inflows since the announcement.
He said this isn’t surprising because advisers will need to take time to think carefully as to the extent to which the re-platforming could constrain service quality during the transition period.
Mr Neilson added: “I would imagine that advisers will want comfort on future client pricing given that someone will need to foot the rather large, and growing, bill for the project.”
Mark Polson, principal of consultancy firm the Lang Cat, doubted there will be a big shift in client assets leaving the Old Mutual platform.
“If advisers are happy with OMW as it stands, there is no reason to jump ship – given the most important thing is ongoing client suitability.”
