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Adviser consolidation continues to dent growth at Nucleus

Adviser consolidation continues to dent growth at Nucleus
 Nucleus chief executive David Ferguson

Advice firms buying each other as had an ongoing effect on the growth of the Nucleus platform, according to its chief executive David Ferguson. 

The company’s latest update to the stock market, released this morning (October 25), showed net inflows on the platform were £111m in the three months to the end of September, after gross outflows reached £379m, more than the £281m seen in the same period in 2018. 

Mr Ferguson had already warned of the impact of adviser consolidation on the platform in July and in today's results he confirmed this was still an issue for the firm.

Mr Ferguson said: “Outflows remain higher than normal but in line with expectations, and reflect primarily the ongoing impact of a small number of firms that have been acquired by consolidators.

"Net inflows remained stable at £111m and, as previously reported, we are in the early stages of a new partnership agreement with one IFA consolidator and are in continued discussions with others.

"We expect these new relationships to enhance resilience of net inflows while also presenting future growth opportunities."

At the end of September 2019 Nucleus had assets under administration of £15.7bn, an increase of 13.1 per cent on the beginning of the year.

The company had 1,389 advisers actively using the platform at the end of September, an increase of 2.1 per cent. Those advisers have 95,373 customers on the platform.

A recent report from brokerage firm Liberum highlighted the risks to the future growth of the platform market as consolidation grips the adviser market.

Consolidators tend to buy advice firms and then switch them to the platform they already use. 

But Ben Hammond, consultant at Altus, said while the trend was real, he felt it was not as easy as Liberum portrayed it to be to switch clients from one platform to another due to rules requiring a platform to act in the best interests of each individual client. 

Ian Taylor, co-founder and chief executive at rival platform Transact, told FTAdviser that he “can’t think of” a significant client his firm has lost as a result of consolidation. 

Meanwhile Mr Ferguson said Nucleus would introduce a range of enhancements to the platform in the coming quarter.

He said: “These include new trading functionality that allows the placing of multiple trade instructions at the same time, enhanced bulk switching capability enabling more efficient performance, the introduction of a faster payments service for withdrawals and new telephony infrastructure.

"All of which are designed to significantly improve service delivery, engagement with customers and advisers, and operational resilience."

Nucleus shares have performed poorly over the past six months, falling in value from £2.29 in May 2019, to £1.42 today. 

david.thorpe@ft.com

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