Abrdn says II deal will help advisers grow, not ‘cannibalise’ them

Abrdn says II deal will help advisers grow, not ‘cannibalise’ them

Abrdn has said its decision to buy Interactive Investor will help advisers which use its platforms to grow their businesses, allaying fears it could in fact “cannibalise” them.

Stephen Whitehead, Abrdn’s chief brand, marketing and corporate affairs officer told FTAdviser II was a “growth engine” for the business, acting as a sales channel for advisers.

“You're going to have IFAs who think ‘why are they buying this business, because surely that cannibalises my business?’ Whereas what we're saying is ‘no, it doesn’t’,” said Whitehead.

“Over a period of time, there will be flows of customers who are doing the easy, do-it-yourself investing that will eventually need to move over to the IFA business.

“Inevitably, as they have more complex needs - be that around drawdown or retirement planning or generational transfer - their needs can’t just be met on the II platform, because that’s purely wealth accumulation.

“These customers will need advice. So we see it [the deal] as being longer-term and quite holistic.”

The deal, which is yet to be finalised, is estimated to be worth some £1.5bn. II has bulked out its platform over the years, increasing value by buying other platforms such as Share Centre and Equinty.

Its decision to sell up to Abrdn has unsettled some advisers, who worried for the future of Abrdn’s existing advised platforms, Wrap and Elevate.

But Whitehead stressed these two platforms and the technology investments Abrdn is making to improve them are “separate” from the II deal.

Asked whether Wrap and Elevate might benefit from some of Interactive Investor’s technology, Whitehead said: “The answer is, no. Interactive Investor sits on very good direct-to-consumer technology, hence the acquisition. What we're doing here is we're buying another growth engine for the business.

“On the [advised] platform side, led by Noel Butwell, we are investing in the technology.”

The company is in the midst of a two-year transformation programme, set to end sometime later this year with the help of technology provider FNZ.

“There already is quite dramatic and quite significant investment in the technology behind the platforms [Wrap and Elevate].

“We are continuing to support the advisers, the IFAs, and it’s considered almost a separate process to the Interactive Investor business.”

Whitehead went on to clarify: “At the moment, and certainly in the immediate future, they [Interactive Investor and the advised platforms] will be kept separate and the technology on the platforms will be kept separate.”

The transformation programme targeted at Wrap and Elevate was designed to bring Abrdn “up-to-date”, according to Whitehead. 

“The adviser and IFA community will hear much more about this over the course of the next six months,” he said. “At the end of the day, it is basically a technology service we are providing.”

FTAdviser understands a shareholder vote is set to take place no later than March on Abrdn’s plans to buy Interactive Investor.