Mergers and acquisitions  

Platform M&A driven by ‘desperate buyers’, says Quilter's Tiller

Platform M&A driven by ‘desperate buyers’, says Quilter's Tiller
Quilter's new commercial and propositions director, David Tiller

A “decent proportion” of UK adviser platform mergers and acquisitions have been driven by “desperate buyers”, and “desperate buyers are rarely the smartest buyers”, Quilter’s new commercial and propositions director has warned.

David Tiller, who stepped down as head of Standard Life’s platform last month, believes “there will be more deals” in the space as firms which have historically operated as wholesale businesses struggle to gain access to customers.

“In some cases, I certainly believe it's naïve behaviour,” he told FTAdviser. “Running a platform is very different. It requires a lot of experience. It's not as easy as plugging in at the wall and hoping it will all be fine.”

In Tiller’s opinion, the outcome of “desperate” M&A deals “hasn’t really played out yet”. 

“Theoretically, scale [of a platform] should matter. But in practice, I don't think scale has yet had the impact on the market which it should have.”

At some point, scale “has to kick in”, the Quilter executive continued. “And at that point in time, the pressure on the long tail becomes pretty significant”.

Now, with competition heating up as a result of M&A and a series of re-platformings, Tiller said firms need to be ready for innovation.

Last year, Quilter migrated thousands of clients from its Old Mutual Wealth platform to a new platform.

Post-upgrade, the firm is now in an investment cycle and ready to fund innovation. “We’ve seen a significant growth in assets and support for the platform since we re-platformed it,” said Tiller.

Other players who have migrated clients in the last five years include Ascentric, Aegon, and Aviva. Embark - which has transitioned customers from both Zurich’s Advance platform and Alliance Trust Savings - is considering a tech migration for Advance.

But some of these re-platformings have brought with them major tech issues, resulting in clients fleeing the platforms.

Tiller believes Transact has done well out of the chaos.

“I think Transact has benefited a lot from other people going through replatforming activities,” he said. “Transact has continued doing what they do and all credit to them for doing that.”

Not a question of price

Tiller said platforms can’t win by staying still following their re-platforming exercises and they also can't win on price alone. He predicted a rebalancing of price and service in the adviser market. 

The dominance of price when considering a platform will lessen for advisers, Tiller said, because of the well-documented advice gap.

“The issue with going down a price line with advisers is you end up with multiple platforms owned by who's cheapest at the time.

“[Advisers’] business models become much more complicated, and they almost certainly have to take on more costs. So the cost of your advice is actually pushed up.