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Aegon eager to consolidate crowded platform market

Adrian-Grace-on-stage-at-Platforum-conference-in-2013.jpgAegon UK’s chief executive says the business could be in line for further acquisitions by the end of the year, as he reflects on one of its top years.

The company released its full-year results today, revealing growth in platform assets for the UK business, totalling £117bn at the end of December compared to £7bn at the end of 2016.

Chief executive Adrian Grace describes last year as the best the company has seen since he joined Aegon UK in 2009.

“As I said to my boss, Mr Wynaendts, this has been the year of all years for the UK. Yes, the results have been bolstered by very strong equity markets and some rises in interest rates, but generally speaking, the strategy we set out four, five years ago is coming to fruition.”

He also confirmed the end of the Cofunds brand will come into effect on completion of the retail migration in Q2.

Grace says Aegon UK will continue to make sure they get synergies out of the Cofunds acquisition, but there are no plans to close any more offices following the shift of a 190-strong operations team from Hove to Witham.

Grace says Aegon UK has demonstrated it can acquire businesses and migrate clients from one technology to another, noting the acquisition and migration of Cofunds was managed “pretty seamlessly”.

Acquisitions could be on the horizon towards the end of the year once Aegon UK is through the migration and integration, Grace says.

“The reality is there are too many platforms in the market, there isn’t enough capacity to service them all. We’ve been very clear that scale and efficiency are key drivers to the profitability of a platform.

“Our view is that the market will consolidate. We’re very eager to be one of those consolidators. If you don’t have a certain size, you don’t have the budget to be able to invest in the user interface.”

Today’s results revealed the company was investing £20m in workplace, which Grace says is more than some smaller platform’s total annual revenues.

While Grace was very positive about the 2017 results, he said market volatility would be a small headwind in the year ahead, although he says the business is hedged against it.

He also said they would respond to demand if a change in markets following strong returns in 2017 impacts the type of products investors and advisers are seeking.

The firm’s Secure Retirement Income product, which offers on-platform guaranteed drawdown, was backed by Aegon Ireland, which was sold to AGER Bermuda Holding last year.

“If I hear an outcry from the adviser community and there’s some demand to justify the product we’ll rebuild it,” Grace says.

He notes many investors have felt comfortable taking investment risk themselves during the bull market, but that might change if volatility returns.

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  1. Well done GBST for the smooth replatforming at Aegon – a lesson which others do not seem to be learning!

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