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Ascentric aiming to wrap up value

Wrap platform Ascentric believes it will break even by 2009, according to executive managing director Hugo Thorman.

He says the platform, which is owned by around 60 adviser firms and Royal London Group, will need around £1.5bn under management before it moves out of the red.

Thorman says he expects all available adviser shares to be bought up within two years and he believes there is no reason for the FSA to act against the firm’s controversial incentive scheme des-pite worries that it subjects advisers to a potential conflict of interest.

He insists that the scheme is compliant with treating customers fairly, provided that advisers take care to disclose their financial stake in the platform to clients.

Thorman says: “Advisers are saying to their clients, we have looked at the market and believe Ascentric is the right option but you have to know if we go ahead with Ascentric I will benefit through my share ownership.”

“If we were more expensive than our rivals, it would be more difficult for the adviser to argue the case but we are not. We are better priced and better valued than all our competitors so it is easy to say there is no conflict of interest.”

Royal London paid an undisclosed sum for a minimum 75 per cent stake in Ascentric last year, which is25 per cent owned by intermediaries. Royal London has already allocated £6m in investment and the outlay has helped Ascentric to buy Investment Sciences, a technology company holding intellectual property rights to the Blue Button internet-based stockbroking technology used by the platform.

Thorman considers that competitors will suffer from sharing intellectual prop-erty rights. He says: “They are competing for the same resources and development so their ability to differentiate is constrained.”

Thorman reports to the fund management division of Royal London but is keen to distance the wrap from the parent firm’s life businesses. He says: “We wanted to put clear blue water betweenourselves and the life prop-ositions. We are independent. We are not being guided by a life company to sell itsproducts.”

He says Royal London has remained “impressively hands off” and says it would be counter-intuitive to alter the firm’s spending plan.

He says: “Having bought the management team for its understanding of the market, it would not be terribly wise then to veto what they recommend. If we recommend something they disagree with, they probably should not have bought Ascentric in the first place.”

Thorman believes that independence rests not with ownership but in the extent to which whole of market is offered. He says: “Some wraps have owners who want them to be a channel for their products – we have not got that constraint.”

Ascentric has more than £225m of assets on its platform, split 17 per cent on Isa and Peps, 39 per cent pensions, 13 per cent offshore bonds and 31 per cent in its general investment account of taxed investments.

Thorman believes that the wrap industry has the poten-tial to hold £1.8tn in financial assets within a decade.


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