AJ Bell  

Andy Bell: PE ownership ‘difficult route to justify’ to advisers

D2C a different story

Despite dubbing private equity “difficult to justify”, Bell also had some positive takeaways from private equity interest in the platform space - both advised and D2C.

“Private equity goes where the sex and violence is. That's what we're seeing here. The platform market is where it's at. So I take that as ‘great, we're in the right spot’,” he said.

On it being a tough industry, Bell asked out of all the platforms available in the UK market, how many are making money? “Not many,” was his conclusion.

According to the Lang Cat's State of the Nation report, 20 of the UK's advised platforms it analysed saw turnover collectively increase by 5.5 per cent between 2020 and 2021. Meanwhile the yield on assets was practically static, up ever so slightly from 0.323 to 0.328 per cent.

“Private equity might actually bring in some good disciplines to platforms where actually making money is not seen as a bad thing or a bit old fashioned, actually it’s seen as a reason why we get out of bed in the morning.”

In the D2C market, Bell said Interactive Investor is a good example of how private equity has created good value beyond simply a profit.

The consumer platform was sold to Abrdn for £1.5bn in December. Previously, private equity firm JC Flowers & Co held a majority stake in Interactive Investor.

“You've got to look at the platform space in both sectors,” said Bell. “On D2C, I think JC Flowers has done a fantastic job through Interactive [Investor] of consolidating that market.”

He added: “[There’s] not been a murmur on admin. If you’re looking into how to do migrations, then Richard [Wilson, Interactive Investor’s chief executive] and the team have done a fantastic job and created real value, significant value.”