LV did not need to build a platform simply for the sake of owning one, the managing director of protection, savings and retirement has said.
Clive Bolton, who said he grew Aviva’s adviser platform from less than a billion to around £20bn, told FTAdviser that the £100mn LV said it needed for ‘IT investment’ two years ago was based on the assumption LV would launch its own platform.
He said it had been a consideration as part of an overall tech upgrade at the mutual. For example, he said that, when he joined LV in 2019, customers could not even look at their investments online - they had to phone in.
“LV was significantly behind the pace there, even though the franchise was very strong,” Bolton explained.
Upon coming in, it was Bolton’s job to begin the “recovery process” following a major demerger with its general insurance business, which it sold between 2017 and 2019.
Called ‘fix, grow, transform’, the turnaround project saw Bolton take stock of the mutual’s then-IT infrastructure.
“When I joined, the organisation was looking to become a platform provider,” said Bolton. Having built a platform practically from scratch, he knew the time and money building one at LV would take.
“I know that well. It requires an awful lot of money to do that.” The mutual was also mulling the option to buy a platform at the time, though this would also have been costly. Last year, James Hay paid £145m - more than LV’s entire IT budget - for Nucleus.
But when Bolton took a closer look, he wasn’t convinced this was the route LV needed to go, considering the platform market was already “well-served”.
“We didn't need a platform,” said Bolton. “What we needed to do was distribute our funds in a platform environment to enable advisers to buy them. We didn’t want a platform for the sake of owning it.”
Last week, LV announced its partnership with Embark. It will see advisers and their clients who use LV gain access to Embark’s retirement-focused platform via an LV-branded service.
Crucial to this partnership is LV’s Smoothed Managed Funds range, which Bolton suggested were - and will continue to be - key to LV’s turnaround.
Without going into the commercials of the deal, Bolton said the Embark deal doesn’t require as much upfront investment from the mutual and allows it to be more targeted with its spend.
Now three years into its transformation programme, LV is starting to reap the rewards of its fund-focused strategy.
Between 2017 and 2020, LV’s with-profit membership base had dropped by more than 40 per cent. These members have access to LV’s fund surplus via a mutual bonus, whereas non-profit members - e.g. protection customers - have voting rights but no access to LV’s profits.