Advisers are hopeful the takeover of Embark and its adviser platform by Lloyds Banking Group will improve service levels.
To this end they are particularly eager to see what changes, if any, Lloyds will make to the Embark platform and in what timeframe.
This morning (July 29) Lloyds said it had acquired the Embark business and its subsidiary brands, which includes the adviser platform but not the Rowanmoor business, in a deal worth £390m.
The deal followed the acquisitions of the Zurich platform announced in November 2019, and the adviser platform business of Alliance Trust Savings from Interactive Investor which was agreed in October 2019.
IFA Steve Osbiston has been around for all of these changes.
He said: “Since the Alliance Trust platform sale to Embark they have struggled to provide an appropriate service to platform clients.
“The whole process needs a lot of new investment and time to put it right. Let’s hope for the clients' sake the platform business is put right pretty quickly otherwise Lloyds may not have purchased very much by the time clients have moved to better platforms.”
Victor Sacks, independent financial adviser at VS Associates, said: “I'll be interested to see what develops and whether they are empathetic to clients who have only recently seen their platforms change from ATS/Zurich to Embark.
"Are they going to wait and make tiny changes over the coming months, or a total change?
“I'm happy to wait and see what happens before looking at re-platforming existing clients.”
Ricky Chan, director and chartered financial planner at IFS Wealth and Pensions, believes changes will be made to pricing and service, with Lloyds likely to restructure the platform to be suitable for its own use.
Chan said: “If history is a useful guide, generally retail products offered by banks are on the expensive side so I’d expect some price increase. I also have doubts about the intermediary support and proposition promised.
“This uncertainty also shows why it’s risky from a business point of view to use new platforms and those not proven to be committed to the intermediary market.”
Hold off for now
When being sold, the Zurich platform was split into two parts, with the retail side being sold to Embark and its workplace savings platform going to Scottish Widows.
With today’s deal the platform will now be back under one roof, under the Lloyds umbrella.
It is these crossovers which make this deal interesting, according to Mark Polson, principal of the Lang Cat.
But Polson warned advisers not to take any action on behalf of clients just yet.
He said: “Operationally we don't know what this deal means just yet. We do know that Jackie Leaper from Scottish Widows will be the chief executive, and it is great to have another female CEO at a platform.
"So we knew a couple of things but not enough for an adviser firm to make a really balanced judgment on suitability for their clients and suitability has to come first.
“I'd urge everybody to keep cool and watch it play out. One of the great things about our market these days is that clients are not subject to penalties or exit barriers.
"There may be administrative problems when moving in the future, if that were necessary, but that's kind of as bad as it gets.”
A good deal
Others believe it’s a good deal for the industry and both businesses, with the Rowanmoor Sipp and Ssas administration arm being left out of the sale.
Nathan Bridgeman, director at Westbridge, said this exclusion was an interesting part of the deal adding “the challenge will be cultural as well as getting value from the deal”.
He said: “The platform space is very challenging with pressure on margins and profitability. Embark has timed the sale very well.”
Martin Bamford, head of client education at Informed Choice, agreed it was a good deal saying Embark shareholders will be “delighted with the price”, and Lloyds will get assets under management, new customers and an enhanced distribution reach fit for the modern age.
He added: “Rowanmoor becoming independent following the deal suggests that business did not suit the digital strategy, but it's better to recognise this pre-acquisition rather than address it later.”
Felix Milton, chartered financial planner at Philip J Milton & Company, said: “The acquisition will make it a lot easier for Lloyds to grow its investment offerings as they’re acquiring an existing platform that already works.
“Whilst there undoubtedly will be teething issues with the integration with Scottish Widows, digitisation of older platforms and assets can only be a good thing.”
Lloyds biggest problem now is to make sure any change does not create any disruption to adviser’s work-flow, according to Dominc James Murray, chief executive of Cameron James.
“What they can likely bring to the table is technology, which in this day and age of pension planning and DB pension transfer advice is critical,” he said.
“I will be watching the approval of this one closely, and I hope the Embark clients ultimately benefit from this move.”
amy.austin@ft.com
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