Well, the summer ended up being one of those that needed inverted commas around it, and I even found myself feeling a little bit sorry for the hundreds of thousands of tourists who descended on Edinburgh for the festival this year. But only a little bit.
We had loads of interesting things happen during what is traditionally a quiet time; no space to cover them all here, but I do want to pick on one and take it out for a little bit of a walk.
FNZ’s intended purchase of GBST is a big deal for the UK platform market; which is to say the UK retail investment market, and it’s worth spending some time on that.
As you probably know, the UK advised platform market is dominated by three big underlying software companies: in alphabetical order, Bravura Solutions, FNZ and GBST. Added to this we have a few firms who use their own kit.
When we widen out the group to include companies such as St James’s Place, Towry and direct platforms, we can add JHC Figaro, SEI Investments and DST Bluedoor. There are also some new entrants that I’ve mentioned before in this column, including Seccl (itself just acquired by Octopus, pending regulatory permission) and Hubwise.
Let’s stick to the advised sector for the moment, and I’ll bring the others in shortly. The current landscape is summarised in Chart 1, which shows the biggest chunk by quite some margin goes to ‘proprietary/other’. That’s because Quilter currently uses its own kit, though it will eventually transition to FNZ once its MOAR (mother of all replatformings) project is finished. Other inhabitants of that segment of pie include James Hay, Seven IM (which uses Pershing), Transact and Parmenion.
The rest of the market – roughly two thirds – uses one of the outsourcers. As you can see, GBST and FNZ have a roughly even split. Each has one real powerhouse of assets under administration in its corner: FNZ has Standard Life Wrap/Elevate, and GBST has Aegon, which by extension gives it the ex-Cofunds retail book of £45bn or so.
Bravura isn’t short of clients either – its powerhouse is FundsNetwork and it also has Ascentric and Nucleus in its corner.
All three also enjoy clients in other areas of the market: Bravura has the Pru, GBST has Canada Life and Vitality, and FNZ has Barclays, Santander and others.
We’ve just about reached the end of the big replatforming wave, which is now replaced by corporate activity, all of which advisers are expected to surf with equanimity. However, as mentioned above, Quilter still has the MOAR to complete. With its considerable AUA moving from the proprietary to the FNZ column, that will reduce that segment from about 36 per cent of sector AUA down to 23 per cent.
If we spool forward, let MOAR complete and assume that the GBST/FNZ deal goes ahead, Chart 2 shows how the market will look at that point. Suddenly the combined FNZ/GBST beast has more than 60 per cent of the advised platform market.