AbrdnAug 11 2021

Abrdn's Butwell explains how AI deal will benefit advisers

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Abrdn's Butwell explains how AI deal will benefit advisers

Abrdn's head of adviser platforms has said the company's acquisition of AI-driven investment business Exo Investing will benefit advisers.

Noel Butwell described the deal as “exciting”.

“Exo is a great business, it’s an exciting acquisition for us, with a real opportunity to compete but also provide solutions for people based on their own circumstances.”

“All of this has been built on the feedback we’ve taken from advisers about what’s important to them and that’s guiding everything we do,” he said.

Ultimately, Butwell said, the firm operates in a market which is capacity constrained.

“There’s not enough capacity in the system to meet the demand in terms of people wanting advice.

“A part of what our focus is on is how do we create capacity and how do we remove areas of friction...that frees up advisers’ time.”

The deal, which is expected to complete in the fourth quarter of 2021, will see Abrdn buy Exo Investing from platform provider Nucoro for an undisclosed sum.

Abrdn said it would use the firm's AI digital investing technology to offer 24/7 digital wealth management to investors through an app.  

Exo Investing's technology allows customers to create a unique portfolio built around their individual goals, risk profile and preferences.

Butwell said Abrdn had a "significant enhancement plan" in the works as it aims to have the number one adviser platform in the market.

He told FTAdviser: “We’re aiming to be the number one adviser platform in the market, that’s very much a big focus of ours.”

He said the group has “re-set” its aims around content and client experience, and has improvements including investment solutions, tools and reporting improvements planned.

There is also a tidal wave of investment from private equity firms in the space, including Abrdn selling its Parmenion platform to Preservation Capital Partners for £102m earlier this year

It follows the acquisition of the Novia platform by private equity firm AnaCap Financial, which in turn follows the firm's purchases of Wealthtime in December last year and Amber Financial Investments in July 2020.

“I’ve never known a time where there’s so much PE interest in the market,” Butwell said.

“But it’s not a great surprise. 

“There’s a massive opportunity in the UK retail savings and wealth market, between 10m and 20m people who would benefit from financial advice.”

He added that ultimately this investment in the industry is on the whole a good thing.

“We need to find ways to allow more people to get access to financial advice, information and guidance and that’s one of the challenges we have at the moment. 

“If [private equity investment] results in more people getting access to quality financial advice then I think it’s a positive.”

Improving results

In its half year results released yesterday, the firm saw an uptick in operating profit in the first six months of the year, despite a drop in cash flows.

The group reported a 52 per cent rise in adjusted operating profit, to £160m.

However, assets under management dropped slightly, from £535bn at the end of 2020 to £532bn, which the firm said was due to “flows and corporate actions” which were “partially offset by positive market movements”

The results come after an turbulent few years after the merger of Standard Life and Aberdeen Asset Management was announced in 2017.

The early years of the combined company saw it focus on its asset management arm - but it is this part of the business that has done most the damage. The firm's 2020 accounts show net outflows of £29bn, with adjusted pre-tax profits down 17 per cent to £487m.

Those outflows included more than £25bn from the loss of a long-standing mandate that had been held by Aberdeen to manage for Scottish Widows, but which was later removed due to Scottish Widows' objections to the merger. 

The firm then sold the Standard Life brand to Phoenix Group as part of a strategic partnership, and rebranded as Abrdn.

The firm said the new brand comes as it was re-focussing its business on three strands: global asset management, technology platforms for UK financial advisers and their customers, and UK savings and wealth.

Stephen Bird, chief executive of SLA, said at the time: “Our new brand Abrdn builds on our heritage and is modern, dynamic and, most importantly, engaging for all of our client and customer channels."