When the ambitious team at Cofunds gave birth to the platform in January 2001, even they could scarcely have imagined it would reach the gargantuan size it has.
At last count, the newly integrated Aegon/Cofunds platform had more than £100bn in assets under management. That’s almost £30bn more than nearest rivals Fidelity and Hargreaves Lansdown. Even when Standard Life’s platform is combined with the recently acquired Axa Elevate, it only comes in at a paltry £44.2bn.
How on earth does Aegon even run a platform on such a large scale? The firm is slowly giving the market some ideas, and not before time.
First things first, “Cofunds” as we knew it is dead. But dropping the brand does not mean Aegon is scaling back its bold ambitions to combine the best of both legacy systems, bringing together additional features for Aegon users with a wider range of investments for Cofunds advisers.
But at what point does confidence become arrogance? The only certainties in life are death, taxes, and that replatforming will always come in over budget. Which brings us to Aegon’s cost projection for the integration. Analysts say the £80m price tag is significantly less than what will be needed.
In response, Aegon could point to the fact that it does not use the same back-office technology provider as the likes of Old Mutual and St James’s Place, which has been blamed for the two most significant cost spirals.
Aegon employs GBST to sit behind the new platform’s retail side, though Cofunds used to have a deal with IFDS, the same people that Old Mutual unceremoniously booted off its own replatforming.
But that will not stop Aegon feeling cost pressures on such an unprecedented merger, particularly as it has tied itself into a price lock, where it has promised that neither legacy Cofunds nor Aegon Retirement Choices users will see fees increase.
Neither ARC nor Cofunds were the most popular with advisers in terms of satisfaction scores before the merger. In the short term, this is hardly likely to improve as advisers have to be walked through a new system. To my mind, the success of the newly updated platform rests almost entirely on how easy they can make the initial adoption by advisers.
Aegon has restated its belief that platforms are a scale game, and that the key growth market within the sector lies with these advisers. We can no longer doubt it has gone all in on its £100bn bet.
Justin Cash is editor of Money Marketing. Follow him on Twitter @Justin_Cash_1