FNZ offering firms deals ‘they can’t refuse’

FNZ offering firms deals ‘they can’t refuse’

FNZ is continuing to grow its private equity-backed platform footprint in the UK adviser market, but some fear it could grow into a monopoly which drives up platform prices.

Platforms currently using FNZ include Quilter, Embark, James Hay, Abrdn, and Aviva.

More recently, national advice firm Fairstone confirmed it will be launching a new platform with FNZ in the final quarter of this year. This is the first time FNZ is working directly with an IFA on a platform deal.

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Advisers have questioned why Fairstone decided on FNZ. Wingate Financial Planning’s director, Alistair Cunningham, tweeted earlier this week: “The most surprising thing about this is they [Fairstone] chose FNZ [rather] than any of the numerous competitors.”

Traditionally, FNZ, GBST and Bravura have been the main three technology providers for platforms. 

But in recent years, other options have emerged. Advice firms can build their own platforms with disruptors such as Seccl, headed up by Nucleus founder David Ferguson, or Multrees - a firm which recently said it wants to expand beyond its family office model

Fundment, launched in 2018, is a platform provider which has chosen to build its own technology, rather than outsource it.

Meanwhile, some firms have focused on the products on top of the platform, such as white-label Sipp provider Hubwise which was bought by SS&C at the end of last year.

Last month, Sanlam Wealth - soon to be known as ‘Atomos’ - told FTAdviser it was mulling a £7bn migration to one of these customised platforms, signalling the scope of change afoot in the market.

So, why did Fairstone choose FNZ? FTAdviser spoke to experts across the industry to find out. At least three said price formed a big part of the appeal.

“FNZ is simply giving them terms they can’t refuse,” said one person in the industry. “I’ve heard talk of deals as low as 5 bps, depending on assets.”

Another said they too had heard this number, while a third said: “FNZ is effectively trying to sew up the market by offering terms which cannot be matched by other platforms.”

However, it is important to remember 5 bps is excluding the usually substantial implementation and ongoing charge costs which sit on top of that.

Abrdn, for example, spent £88mn in the first half of this year on restructuring and corporate transaction expenses - much of which was made up of its FNZ platform transformation. Lloyds has budgeted £150mn all-in for its remaining FNZ migrations, and Quilter spent £220mn on its FNZ revamp.

But compared with the market, 5 bps is the cheapest - at least half of the price of the next cheapest competitor. Fundment charges 25 bps, Multrees charges 15 bps, and Seccl charges 10 bps. All the while, the average client pays 34 bps, according to analysis of Lang Cat data.