EmbarkAug 24 2022

Embark: White labelling ‘as important’ as growing retail arm

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Embark: White labelling ‘as important’ as growing retail arm
Embark's chief executive Jackie Leiper

Embark has big plans for its white-label platform service as it looks to build scale through the uptick in mergers and acquisitions happening across the IFA profession.

Since the Lloyds takeover last year, the focus has been - and will remain for now - on growing the bank’s direct-to-consumer arm. 

But Embark's chief executive Jackie Leiper told FTAdviser what her team builds on the retail side will be “reusable” on the white-label side of the business to ensure “advisers get the best of both worlds”.

“One of the things that we're excited about following the bank acquisition is the ability to white-label and create more personal models for those strategic partnerships [such as Openwork],” said Leiper.

Currently, adviser members of Openwork mainly use Advance by Embark, the Zurich intermediary platform Embark bought in late 2019. The partnership sees Openwork distribute Embark’s products, and includes the promise that Embark will build Openwork a custom platform.

In March last year, the two confirmed they would extend their existing platform agreement to 2026.

“While that isn’t actually the main reason that we [Lloyds] bought the business [Embark], since I've been onboard just over six months now white labelling is the area I can see huge potential for growth,” said Leiper.

“If you have a look at what's happening in the intermediary market with the consolidation activity, I think we can all see there’s going to be less firms, and bigger firms, because these bigger firms will continue to buy out advisers.

“The model Openwork has gives you a bit of a blueprint on how you provide those services elsewhere.”

We’re effectively acquiring adviser firms.Jackie Leiper, Embark

Leiper admitted Embark’s change in ownership last year, followed by the announcement of plans such as its intention to launch a direct to consumer investment platform, did initially rattle Openwork and lead the network to worry their support might be threatened.

Dispelling these worries, Leiper said Embark is currently working on a roadmap of improvements for Openwork alongside the network’s own investments in its technology.

“Equally, we’re starting to work with some other opportunities now that will develop along a similar line. The white-label deals have a longer gestation period, but it’s a really exciting area for us,” said Leiper.

Embark also supports consumer platforms such as Wealthify and Nutmeg with its technology. The company is open to how its platform partnerships operate - whether a company wants to simply use the core technology, wants to host Embark’s investment products as well, or wants all of that plus support and management provided by its staff.

“I can see that the white-label business to business channel is going to be just as important [as the retail channel] because a lot of the retail intermediaries will actually come into us through that route, because of the consolidation activity that's happening in the intermediary space,” Leiper explained.

“We’re effectively acquiring adviser firms and therefore are building scale in that way. We’re the technology provider, and sometimes the manufacturer of the products.

“Once you've got a relationship like that, it's a great way to scale and develop a strategic relationship. You’re now working on one set of requirements for that firm. Rather than on hundreds of different individual adviser requirements, which is always the challenge - trying to make sure you build something that appeals to everybody.”

Still in ‘prove to me’ phase with advisers

Over the past year, a number of advisers have complained about Embark’s service levels.

One adviser, who wished to remain anonymous, told FTAdviser back in May that it was taking at least six months, in some cases 12, to move a client off the platform, and that one attempted transfer led to a client unable to trade for “months on end”.

In January, advisers also decried a fee change for 41,000 former Alliance Trust Savings clients which were migrated to its Embark Platform following an acquisition back in 2019.

Director at Future Life Capital Trevor Whiting said some of his clients now have to pay 300 per cent more in fees as a result of the change, despite Embark stating “no customers will face a substantial increase”

Embark has two adviser platforms, Advance by Embark and Embark Platform. The company is currently in the process of spending £150mn to move everything onto FNZ, though much of its technology is already sat atop this provider.

Embark Platform is already on FNZ, and Advance by Embark is in the process of being moved fully onto the technology provider.

“I think we’ve already made fairly positive strides,” said Leiper, when asked for her thoughts on recent adviser complaints.

“I’ve got my ear to the ground and I’m doing a piece of research with advisers right now on what they think of Embark, where the pain points are to help us to prioritise which micro-services we can develop.

“Advisers can see consistency in the delivery of the services. Until they've had several interactions with us which they feel are positive and they can see the difference we've made since the acquisition, I suspect I'll still be in the ‘prove to me that it is improving’.”

The platform provider is undergoing process improvements, such as a transfer redesign, but Leiper was quick to say that this is not “an overnight fix”.

ruby.hinchliffe@ft.com