The duo behind new platform business Nucleus believe their single-mindedness and returning power to IFAs will be key to their success.You could be forgiven for wondering if chief executive David Ferguson and business development director Philip Martin have deliberately followed each other around the financial services industry. They both studied actuarial mathematics, which determined their path into financial services. Both applied for jobs at Scottish Life but while Martin was made an offer and turned it down, Ferguson did not get an offer. Both started their careers at Life Assurance of Scotland, now part of Resolution Life. Ferguson worked on the life side and Martin on the pension side of the business, both in the actuarial division. They then indepen-dently moved to Ivory & Sime and started looking at unbundling packaged products that were being sold in the UK. Ferguson and Martin then both joined the Scottish Life International management team. It was while they were here that the pair started forming their business plan for what was to become Nucleus. Paul Bradshaw, who is a non-executive director of Nucleus, gave the pair some sound advice. Martin says: “We ran into Paul and told him of our plans. He told us to hold off until we had gained a bit more market experience. That was when we set up The Abacus. Several years later, we both feel that we have matured enough to put our plans into action. The time is right both from a market perspective and for us personally.” Neither planned on who would take on which role, saying they developed more organically but they share a passion for the model. Martin says: “We refuse to prostitute our model. We are both totally focused on that.” Ferguson says: “We wanted to build the gem of the wrap market. We do not think of ourselves as just another wrap provider. We have shifted the power away from product providers that are paying the commission to the IFAs themselves.” The duo believe that their combined experience of working across onshore life companies, asset management firms and offshore armed them with the tools they needed to make their plan a reality. Ferguson says: “It was that and a lot of luck, really.” The failings of the UK life industry and its negative image prompted the idea to look elsewhere to promote financial advice. Ferguson says: “We recognised that the UK life industry was just not functioning very well. As actuaries, with our combined experience, we are able to look at the world from different angles. We also spent a great deal of time with IFAs so we started to put the onus back on to them.” They want Nucleus’s relationship with IFAs to be a two-way street and believe the value has shifted from manufacturers to advisers. Martin says: “It is not a case of them investing in our company. It is a symbiotic relationship that has us both working in each other’s interests – us as the platform providing access to the underlying assets and the IFAs that both own and use it.” The pair expects to see a lot of consolidation of the provider-owned platforms. Martin says: “So many of them entered the market at more or less the same time. It is a classic defensive mechanism as they recognise that old-style profitable contracts are no longer viable.” Ferguson says he expects we will see a lot more Australian technology firms entering the UK space as they underpin new platforms and wrap models. They also sought funding from outside the UK by South African firm Sanlam to avoid any conflicts of interest. Ferguson says: “UK technology is a major hindrance. It is clear that the Australian market is light years ahead of ours. I definitely think we will start to see more Australian players coming to market to support UK platforms.” Nucleus has a lot of admiration for the Transact business model but says that in passing the power back to the IFAs through ownership, it is in their best interests to continue to support that model, with the ultimate Nirvana being that only a single wrap offering is required. It sees the future of distribution lying with the smaller, directly regulated regional IFA firms rather than big networks, saying that the current network model is under threat. Martin says many network members are probably not perfectly aligned with the Nucleus model although there are longer-term plans to develop the platform to accommodate lesser skilled advisers. They say that the types of consumers seeking advice from IFAs tend to be those with a lot of money or very complex financial affairs. Ferguson and Martin expect that others will look to the banks, building societies and multi-tied models for their financial needs. Ferguson says that with the blank sheet of paper and without the burdensome legacy suffered by many of the provider-owned wraps, they are operating in line with the FSA’s focus on transparency and treating customers fairly and for this reason they do not see that they have any competition. He says: “We are not just another wrap provider. What we are aiming to do is create an environment that enables IFAs to do their jobs properly.” Outside of work, Ferguson loves football while Martin’s passion is horse-racing and he apparently has an encyclopaedic knowledge of the sport. Ferguson says: “He knows more about racehorses than most people who own them.” The pair certainly hope to be making the running in the platform stakes.
David Ferguson (pictured above right) Born: Edinburgh, 1969 Lives: Flat in Edinburgh city centre Career: July 2006-present: Nucleus Financial Group chief executive, July 1999-July 2006: The Abacus founder and director; May 1996-July 1999: Scottish Life International marketing manager; May 1994-May 1996: Ivory & Sime product development manager; August 1991-May 1994: Life Association of Scotland/Britannia Life actuarial student;1991-1994: Faculty of Actuaries Education: Honours degree in actuarial mathematics and statistics from Heriot Watt University Likes: Live music, meaningful conversation, white Burgundy, South-east Asia and Heart of Midlothian FC Dislikes: Ignorance and intolerance Drives: Mini Cooper S Works Favourite book: Long Walk to Freedom by Nelson Mandela Favourite film: Twelve Angry Men Favourite album: The Stone Roses’ first album or anything by David Bowie, the Cowboy Junkies, Natalie Merchant or the Blue Nile Hero: Muhammad Ali Life ambition: To wake up every day with a smile on my face Career ambition: To see Nucleus at the heart of a mature retail financial services sector If I wasn’t doing my current job, I would be… A musician or a journalist
Philip Martin (pictured above left) Born: Glasgow, 1967 Lives: Edinburgh Career: July 2006-present: Nucleus Financial Group business development director; 1999-July 2006: The Abacus founder and director; 1996-1999: Scottish Life International business development manager; 1994-1996: Ivory & Sime TrustLink customer services manager; 1989 to 1994: Life Association of Scotland Education: Perth High School; actuarial maths, Heriot Watt University Likes: Cinema, horse-racing, crab and mayonnaise, cold Mersault and crosswords Dislikes: Dishonesty, The Daily Mail and all its columnists and bureaucracy Drives: Mercedes Favourite book: Jude the Obscure by Thomas Hardy, The Prime of Miss Jean Brodie by Muriel Spark Favourite film: Get Carter (but not the remake) Favourite album: Walk Across The Rooftops, Blue Nile Hero: Clement Attlee, Kieran Fallon Life ambition: Contentment career ambition: To work with the key quality IFA firms as part of Nucleus If I wasn’t doing my current job I would be… Based on the original plan, probably teaching English or trying to make my way as a hack