OctopusJan 20 2022

Ferguson: I would have set up my own firm if that's what it took

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Ferguson: I would have set up my own firm if that's what it took
David Ferguson, incoming CEO of Seccl

The industry veteran is on his fifth month of garden leave after exiting the platform he spent more than 15 years growing.

But come April, Ferguson will take on the role of chief executive at Seccl, a white-label platform provider targeting advisers, amongst other clients, and offering do it yourself platform models.

“I was perfectly prepared to go back to a start-up scenario if that was the only way to do it," said the one-time founder.

"But when I came across the company [Seccl] and met the team at Octopus, it seemed like a really good opportunity. The thing that's different is it's got the benefit of being a really cutting edge technology provider."

Ferguson stressed the fact Seccl owned a self-built technology stack which is digital from start to finish.If Seccl's technology hadn't existed, Ferguson would have considered starting a new company with the same values of giving advisers more ownership of the platforms holding their clients' assets.

He believes there is a growing adviser appetite for more liberty, something he witnessed at Nucleus too.

“We used to have an adviser market beholden to product providers. But in the last 10 years, a degree of liberty has evolved and Seccl is a natural extension of this," he explained.

At Nucleus, Ferguson eventually required advisers to become shareholders in the platform, which he cited as an early form of such liberties.

'Won't miss sleeping on the office floor'

Starting from nothing back in 2006, Ferguson matured Nucleus into a business ripe for acquisition with a £145m price tag and £20bn of platform assets. 

Alongside the likes of Transact and Standard Life Wrap, Nucleus successfully injected new energy into an advised market which had become tired of legacy fund systems.

This put him in good stead to head up a company which - according to its chairwoman - is primed to spark the “next evolution of platforms”.

I was speaking to Sam Handfield-Jones the other day [Seccl’s current co-CEO] about all those times you’re sleeping on the office floor. I don’t necessarily want to rush back to that.Ferguson

But before Ferguson gets stuck into his new venture, he’ll be enjoying at least another two months of rest.

“It’s been quite nice to have some time to chill out,” he told FTAdviser. “Nucleus was a pretty full on experience.”

Back in 2019, following Ferguson’s 50th birthday, the Nucleus team gifted him a music tour of Berlin. Yet to make it across the continent, he is hoping to satiate his love for Iggy Pop before starting at Seccl in April.

Asked how he’s expecting to find the transition, Ferguson said there were certain aspects of a pure start-up he won’t miss.

“I was speaking to Sam Handfield-Jones the other day [Seccl’s current co-CEO] about all those times you’re sleeping on the office floor. I don’t necessarily want to rush back to that. I mean I did that back in Nucleus times, so I’m not in a hurry to do that again. Hopefully Seccl is past that point.

“When we started Nucleus back in 2006, literally the first thing we did was go and buy computers. It was that sort of ground level. Seccl’s obviously a bit further along the track than that, and it’s got - by quite a substantial margin actually - the best technology in the space.

“It’s about four years in, rather than four days in. It’s a real thing, which takes away some of those really hard yards in the early days.”

Shareholders with ‘significant’ ambitions

From April, Ferguson will be tasked with executing what he called the “significant” ambitions Seccl’s shareholders have for the business.

Back in August 2019, Octopus Investments acquired Seccl for £10m. Seccl’s chairwoman, Ruth Handcock, is also chief executive of Octopus Investments.

She told FTAdviser the board is “ready for this to go really big really quickly”, as her team welcomes the eve of “the next platform evolution”.

Like Handcock, Ferguson feels as though the market has reached a moment in history where technology has moved on, meaning Seccl has “timed it just right” with its entrance.

The ambition of the shareholder is significant, as is mine.Ferguson

“When Nucleus was launching, alongside Standard Life Wrap, and just before the RDR [Retail Distribution Review], there were three fund supermarkets - which at the time were Cofunds [now Aegon], Funds Network and Skandia [now Quilter].

“They, between them, had 94 per cent of net inflows into platforms. And then a few years later, RDR came along. Rules changed. Technology changed. And I think at one point they were down to something like 12 per cent.

“So as we go through this change, which is not regulatory driven, but is technology and efficiency driven, there’s no reason why a similar transition couldn’t happen.”

Whilst Ferguson is wary of the pressure resting on his shoulders to deliver on this market observation, he seems comfortable with what is expected of him.

“I think the ambition of the shareholder is significant, as is mine. I think we’re extremely aligned on that and share a very similar view. 

“So there’s a willingness on both sides. Octopus has got really big hopes for what we can achieve. So I think that's the job.”

Advisers ‘resilient to change’

A big challenge for Ferguson and his team at Seccl will be convincing advice firms to take the leap and own their technology,

Back in November, NextWealth’s CEO Heather Hopkins told FTAdviser that although white label platforms “sounded appealing” to IFA firms at the start of 2021, by the end of the year they were questioning operational costs and benefits for the business.

To operate their own platform, advisers must take on a new set of regulatory responsibilities - regardless of whether they’re an appointed representative or a direct operator with their own permissions.

Hopkins said it was hard to do for the same fee as established providers, and that some firms worry having their own platform could distract from a sale if the acquirer already has their own platform.

I can certainly see the platform market becoming somewhat more of a switch market again.Ferguson

Confronted with these challenges, Ferguson said “no platform is right for everybody”.

Asked whether he thinks advisers are ready for white-labelled technology, the platform founder pointed to around seven years ago, when the platform market became a switching market.

“It wouldn’t be a great surprise to see that again, with digital platforms pushing on from wrap platforms.

“If you look at the example of P1, one of Seccl’s partners, the cost to a customer for a fully digital experience is 0.17 or 0.18 per cent, which is a lot less than what the rest of the market is selling. And they’re selling something analog.

“So I think you could easily see advisers saying ‘oh wow, this can actually change the efficiency in my practice, look what I can do for my clients’. 

“I can certainly see the platform market becoming somewhat more of a switch market again.”

Ferguson also noted that the market’s switch to fees has already seen the rules of the game change for advisers. 

“It might sound cliché, but advisers have proven time and time again that they are resilient to change.”

ruby.hinchliffe@ft.com