Old Mutual’s decision to drop the technology company that powered its platform could prompt advisers to think about shifting client assets to different providers later down the line, industry experts have said.
Earlier this month, Old Mutual shocked the industry by announcing it was terminating its contract with IFDS, deciding to use technology supplier FNZ instead.
The head of Old Mutual Wealth, Paul Feeney, told FTAdviser it would have cost too much time and money to upgrade the platform technology if they had stayed with their original IT provider.
Industry figures have disputed whether the announcement will trigger a big shift away from the Old Mutual platform, but they expect advisers to review their platform providers when there is greater clarity around the changes taking place.
I don’t think we’ll see advisers deserting Old Mutual in droves.Mark PolsonBill Vasilieff, chief executive of Novia, questioned whether Old Mutual will be able to make the huge cost cuts they have outlined by opting for FNZ.
"This project is more complex than just building a new platform; it is a substantial migration involved and I'll be interested in seeing whether they end up paying £160m."
He also claimed this recent announcement just adds to advisers' existing concerns about changes at Old Mutual, such as the firm setting up a restricted sales force and the overarching group's radical restructure as it splits into four parts.
"I think it's a mixed bag in terms of when advisers shift money around; a lot of advisers will wait and see how it pans out, but some are already unsettled."
Mike Hogg, head of proposition for Standard Life's Wrap platform, said it was too early to say whether it would see a material shift in business.
But he said he had seen evidence of advice firms questioning their long-term choice of platform partners in light of uncertainty about a number of providers, adding: "There are few examples of successful re-platforming at scale and a high potential for disruption to client service in the process.
“This uncertainty means conversations with firms are opening up that might have historically been closed."
Despite Old Mutual consistently being among the largest cede companies of transfers onto Nucleus, Barry Neilson, head of business development at advised platform Nucleus, said his company hasn’t seen an increase of inflows since the announcement.
He said this isn’t surprising because advisers will need to take time to think carefully as to the extent to which the re-platforming could constrain service quality during the transition period.
Mr Neilson added: “I would imagine that advisers will want comfort on future client pricing given that someone will need to foot the rather large, and growing, bill for the project.”
Mark Polson, principal of consultancy firm the Lang Cat, doubted there will be a big shift in client assets leaving the Old Mutual platform.
“If advisers are happy with OMW as it stands, there is no reason to jump ship – given the most important thing is ongoing client suitability.”
The platform expert said most advisers will wait to find out what the new platform will look like, and what the impact of the Old Mutual group restructure will be, so they can make an informed choice about their chosen platform.
Mr Polson added: “I’d expect advisers who take an interest in how their platforms work – which should be all of them – to have concerns; but I don’t think we’ll see advisers deserting Old Mutual in droves.”
Miranda Seath, senior analyst at Platforum, agreed that advisers are unlikely to move assets off the platform in the short-term.
She also highlighted the importance of the firm communicating with advisers, pointing out that it had contacted all of its major accounts promptly to keep them abreast of their plans.
However, Ms Seath said one concern is that the timeframe to install some fairly standard functionality is out of step with the market, pointing out for example that discretionary model portfolios and ETFs are standard offerings on most platforms already.
The analyst said it was therefore critical that Old Mutual Wealth sticks to its re-platforming deadline, pointing out that the other two big platform players FundsNetwork and Cofunds are set to complete their technology upgrades ahead of Old Mutual.
She also suggested rivals such as FundsNetwork and Aviva will seek to capitalise if there are any mis-steps in Old Mutual's migration of assets.
Tony Catt, compliance consultant at TC Compliance, expressed concern that the new technology provider might still cost a lot of money and further delay the re-platforming.
While he said he wasn’t aware of shifts away from Old Mutual since the announcement, he argued this might change if the delay takes longer than expected, or if there are complications with the upgrade.
“Anything that causes doubt will not be in the interest of Old Mutual, so the company will be keen to put advisers’ minds at rest as soon as and as often as possible.”
Steven Levin, chief executive of investment platforms at Old Mutual Wealth, highlighted that FNZ already has a fully operational and integrated offering which is used by a number of other UK financial services companies.
"FNZ has completed three complex bank migrations in the last two years and is well positioned to take on this programme," he said.
Mr Levin also pointed out that Old Mutual's UK platform business scooped up record inflows in the first quarter of 2017, hitting £1bn from the £700m posted during the same period in 2016.
Patrick Connolly, certified financial planner at Chase de Vere, said: "As technology continues to advance it is an ongoing challenge for advice firms to ensure they are working with the right providers."
He said advisers should review their platform on an ongoing basis to make sure it is providing the best value service to clients.
katherine.denham@ft.com
