Nucleus rivals ‘overpriced’ DFMs with planning-led MPS

Nucleus rivals ‘overpriced’ DFMs with planning-led MPS
 David Ferguson, CEO of Nucleus

Nucleus has pledged to take on “underdelivering” and “overpriced” discretionary fund managers with its new, adviser-focused managed portfolio service.

Following a soft launch, the MPS — named IMX — is now available to all Nucleus advisers, providing a 23-strong portfolio range that the platform pledges will offer better value for money and investment performance in line with financial planning goals.

David Ferguson, chief executive of Nucleus, said: “For far too long, retail asset management and DFM services have been overpriced, oversupplied, and have tended to underdeliver for the end user. 

“Financial planning is about people, not products, and our analysis indicates the portfolio component can be done better and at much lower cost without simply going passive.” 

Mr Ferguson told FTAdviser IMX would ensure it delivered value for advisers by aligning its service with financial planning.

He said: “We didn’t start this service being an asset manager. Most DFMs come from investment management heritage and they get excited about performance and products.

“We’re not trying to be a top performer or stand out in that way — we’re saying that if you have a 30-year financial plan, we can give you the best chance of getting that outcome.”

IMX has been built using an ‘outcomes-led’ approach, using data analysis to create a set of hypothetical client goals.

The portfolios have been created by Nucleus in collaboration with the expertise of investment services firm Hymans Roberston, putting “institutional capabilities into the hands of Nucleus’ advisers”.

Mr Ferguson said: “We’re not coming along with some big story saying we’ve got some wacky new idea which is going to outperform.

“The methods we’re using are very well-established in the institutional market. We’ve taken those techniques and put it into the retail market.”

The price of the IMX service comes in at the lower end of the market, costing 15 basis points. The fund management aspect of the portfolios will cost between 20 and 36 bps per year to give an all in fee of 35 to 51 bps.

Mr Ferguson said the “whole chain” would experience pricing pressure going forward, but that “grotesquely overpriced” retail asset management firms were most likely to be hardest hit.

He added that the platform had “no plans” to introduce its own fund range or become more vertically integrated, but noted that “nothing is off limits” and that further integration was possible wherever it benefitted the customer.

Initially announced in April last year, IMX has been delayed on numerous occasions due to the Covid-19 pandemic.

Nucleus has previously said it hoped the service would “bolster” its revenue, attract new users and create other product opportunities.

The platform has been on a tech-drive recently, acquiring OpenWealth’s UK business to bring the assets and people that provide operational services to Nucleus “in house”.

It is also pumping £3m a year into its technology department in a bid to become the “top dog” of the platform technology.