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Advisers welcome new Nucleus structure

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Nucleus chief executive David Ferguson

Advisers have praised changes to Nucleus’s shareholder structure, which will continue to allow them to take a stake in the business while allaying FCA concerns.

Nucleus recently announced it was reviewing its business model, which allows advisers to take a proportion of shares based on the assets they put with the platform. Nucleus’s 2012 accounts confirm the regulator said this structure is in breach of adviser charging rules.

This week, Nucleus confirmed advisers will still be able to buy shares in the platform post-RDR. However, their stake will no longer be determined by asset size.

Advisers will be now only be able to buy shares in Nucleus on a transactional basis.

A note sent to advisers this week says: “We were encouraged to note the FSA was content (and arguably even happy) for advisers to invest in platform operators. 

“The regulator appears to appreciate the governance, oversight, risk management and efficiency benefits that this can offer, provided the usual suitability and conflict of interest matters have been appropriately addressed.”

Nucleus user and Page Russell chartered financial planner Tim Page says: “This reduces conflicts of interest, although there is still an element there. As long as this is managed and disclosed it is not a bad thing. I think having adviser shareholders has been hugely positive and Nucleus would not be the business it is without that.”

Yellowtail Financial Planning managing director Dennis Hall, who does not use Nucleus, says: “It is an interesting move and one which I think will be popular because advisers can continue to share in the success of the business.”

Adviser shareholdings make up 51 per cent of the business but this could rise in future as new adviser shares will dilute all holdings.

Sanlam currently owns 42 per cent with Nucleus management holding the remaining 7 per cent.

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