Nucleus ends deal talks to sell DFM ahead of wind-down

Nucleus ends deal talks to sell DFM ahead of wind-down

Nucleus has ended discussions with a potential partner to sell its discretionary fund manager ‘Nucleus IMX’, telling advisers it is planning to stop providing the managed portfolio service over the next six months.

In a letter sent to advisers late yesterday (December 13), IMX head Jonathan Letham said the half-year wind down period will help with inflight cases. The platform plans to accept new clients until March 15, 2023.

However, from June 15, it will no longer manage IMX portfolios on behalf of clients.

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FTAdviser revealed Nucleus's plans to sell the business back in May. It was keen for a third party to take on the responsibility for running it, allowing the service to remain open for advisers and their clients. 

“As you're aware, we've been exploring a partnership model for IMX and have been in advanced discussions for several months with a potential partner,” said Letham.

“However, these discussions have recently concluded without an agreement and as a result, we’re planning to stop providing the IMX managed portfolio service over the next six months.”

Since the platform’s sale to James Hay’s owner, responsibility for IMX has sat under Alex Kovach, the chief commercial officer of Nucleus.

Having soft launched in August 2020, IMX formally launched in January 2021 - a month before the advised platform was bought by James Hay’s owner Epiris, and later bought out again by HPS.

Initially, some advisers were reluctant to support the platform’s foray into the DFM world due to the timing of the launch coinciding with a change in ownership. They feared the new investment proposition might not align with Nucleus’ corporate proposition going forward. 

But some within the business, when it first launched, were keen to grow the service. Other players have already combined platform and DFM services. 

Smaller rival platform Third Financial started off as a discretionary manager software house back in 2007, before building a platform alongside it which now hosts £6bn of assets.

Nucleus’s DFM service consists of 23 portfolios, used by just eight firms. IMX’s service charge is 0.15 per cent, while its asset charge comes to 0.30 per cent, meaning its total portfolio charge amounts to 0.45 per cent.

FTAdviser understands Nucleus is currently looking at internal opportunities for the four full-time IMX employees, with discussions still live.

The IMX team is headed up by former Redington executive, Jonathan Letham, who joined the platform in April 2019.

There are three people in the permanent team besides Letham. These include investment analysts Robert Njoroge and Daniel Boyd, as well as investment operations analyst Lewis McWilliams. 

Rather than making its DFM service a core part of the business, Nucleus has instead been focusing on its new retirement investment platform.

The new platform, which will be rolled out to James Hay advisers first, will sit on FNZ technology.

In September, the platform business said it was still "hoping" to soft launch the new FNZ platform at the back end of this year, but "so be it" if this launch spills over into early next year.