Aegon  

The pitfalls for platform providers

This article is part of
Guide to platform consolidation

The pitfalls for platform providers

Of the examples of platform consolidations that have taken place, there is one major deal currently very much at the front of people’s mind: Aegon and Cofunds. 

When Aegon officially announced the long-anticipated acquisition of Cofunds from Legal & General for £400m in 2016, the buyer said it would be moving the Cofunds clients onto a new version of the Aegon platform that would include the "best of both" systems.

This is effectively what is termed 'replatforming' in the industry, where the company needs to upgrade its technology, so builds a slicker replacement system and migrates clients over.

Aviva is one of many platforms currently going through this, moving from its old Bravura system to one built by FNZ.

This project has been tumultuous to the point where advisers have contacted MPs to highlight problems the project’s hiccups have had on clients’ access to their funds.

Mark Till, managing director of Digital Solutions at Aegon, said the Cofunds consolidation would, “combine the best of both the existing platforms on Aegon’s technology”.

One of the main reasons stated by Aegon for buying Cofunds was to get scale in the platform market. 

In 2017 Mr Till told FT Adviser: “Obviously, with [Cofund’s] scale combined with Aegon’s scale and the BlackRock business we bought last year we think we can bring significant benefits, both confidence about ownership, about investment in the user experience, but also in bringing the price of the platform down over time."

The merger put Aegon in prime position in terms of UK market share. According to the company’s 2017 annual report it now has total assets of £117bn.

Aegon previously stated that later in 2018 it plans to move all current Aegon clients over to the same new version of the platform the Cofunds clients have been moved to.

Meanwhile, it is firefighting the issues that have arisen from the first stage of the migration which began in May.

These range from advisers not being able to log into their accounts, or produce reports, to advisers seeing disparities between the amount of money in an account and the amount that should have been there.

There are also reports of income payments being missed.

Pending problems

Abraham Okusanya, founder of financial services consultancy Finalytiq, says he understands some of those issues have been resolved but there are still some issues pending.

On Aegon’s part, it has responded to complaints from its users with an apology from Mr Till for the administration issues he said would be resolved as quickly as possible. 

Mr Okusanya explains the different types of platform consolidations and also why they have a tendency to be so disruptive for users. 

“There are both corporate and technical consolidations and we can talk about pros and cons of each," he observes.